AROC - Earnings call transcript Q2 2019

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Operator

Good morning. Welcome to the Archrock Second Quarter 2019 Conference Call.

Your host for this morning's call is Paul Burkhart, Treasurer and Vice President of Investor Relations at Archrock.

I would now turn the call over to Mr. Burkhart.

begin. may You

Paul Burkhart

Chief Hello today's Rob. President thanks joining Doug for Chief Archrock. Thank With everyone me on Aaron, and Archrock; call. Officer Childers, Officer today us of Executive you, of and Financial are and Brad

and its quarter results for Yesterday, of financial the XXXX. Archrock operating released second

copy, If at www.archrock.com. a find information you have you received on the can not the website company's

XXXX of based make and Section we Archrock's our assumptions During will forward-looking Exchange statements Act the as and this team. management and of of XXE information beliefs meaning on the current to well expectations Securities call, within currently as available by made

be reflected they Although management assurance expectations no expectations forward-looking to statements such in can the correct. give are reasonable believes that that prove such will

our this SEC of the to refer from for actual to with during filings that factors in differ latest made call. list those statements results materially cause may forward-looking a the Please

our adjusted discussion will addition non-GAAP margin, dividend. certain and available reference percentage, gross margin for EBITDA, In cash measures including today financial gross

of press For yesterday's GAAP results, our financial financial furnished to the measures see non-GAAP Form SEC. and please to our release these X-K reconciliations

now Brad Archrock's quarter update to and over call second an turn of to discuss provide business. the results our I'll to

Brad Childers

and Archrock gross Paul and adjusted fleet, good our margin excellent Thank segments. in you, results percentages both morning achieved attractive strong of quarter compression contract growth everyone. for including second EBITDA, expansion further

and year delivered the of to quarter. of million $XXX Archrock with increase EBITDA summary $XX quarter. a over key call quarter increased income today's second XX% for prior record brief second quarter adjusted of of in million $X from start compared Archrock a highlights of an I'll million Net the substantially XXXX. the

margins horsepower aftermarket operations horsepower quarter gross We base bringing services. million. the total our of both guidance to Archrock's quarter operating contract high and operating for range and We of end more achieved at X.X at end adding XX,XXX than expanded the in our

We while And in dividend our latest shareholders the later expect Elite declared dividend, deliver X.X team increase times. announced near close a operations to we acquisition we quarterly We Elite peer-leading of a our benefits to will of significant over members week. which this maintaining the XX% believe and the long-term. sequential and coverage Compression

every every of to quarter Archrock. returns day was excellent this By measure, extremely shareholders. for worked to customers our a hard service safe Thanks deliver fantastic employees great to a who dedicated team to and and our

year high contract the operations, of our our from our full benefiting operations to team. and from strong focused excellent improved pricing, end during gross guidance Turning our at execution margin XX% operations management, range the quarter, to cost

horsepower production at growing operating total XX,XXX in significant additions our associated horsepower with is gas fleet The volumes. that mostly attributable to growth plays oil service primarily

and our of deployments Ford. from largest remains driver also solid with Permian the the activity Eagle DJ the coming The fleet growth organic Basin and

today Our focus quarter our focus activity and of Large future. that horsepower in large XX% services midstream end our to and growth of the the operating of our total comprised equipment fleet second the at continues remains the horsepower newbuild activity.

XX% gross In services year guidance to improved our business, also full range. high we aftermarket our of the end margin at

percentage, gross to and in saw below the margin margin was we defer we activity line revenue AMS as the increasing in on dollars. our several gross due Still customers expectations jobs. contributed maintenance Our our business lower quarter some passed margin

gas stable the U.S. the the drivers natural low remained fundamental market, prices benefiting and turning the for Compression Now, to last decade. compression over experienced directly is market sound. from long-term

the feedstocks This Mexico plants. of gas form natural exports, stability for has U.S. a plant, exports, driven petrochem power for structural in low-cost demand fuel in and increase gas-fired LNG gas

believe this we to to we've supply. production has incremental required production support sharp natural years, the infrastructure for with experienced transportation of significant driven the in and future increases years, experience and increased continue demand in we'll expansion the in together gas This recent

Beneficially, dynamics gas component not in forecasts compression gas to is a in far required market led being infrastructure. of most natural production U.S. increases XXXX, record and transportation this show production natural and XXXX behind. These

As result, customers advance to in continue plan compression future a in core needs needs XXXX. currently preparing for with many our their for

quote As activity pricing a spot consequence, and customer remained solid.

coupled increase in our with our growth evidenced as gross the in operating horsepower margin. XX in this a capturing organic market increase profitably last fleet XXX,XXX continued by over the We're months,

We strong value. assets are from shareholder and strategically long-term will that deliver in drive investing returns long-term contracts

now customers to in newbuild strategic we're program into substantially XXXX XXXX. and growth well plays, is booking Our committed

Looking continue, to and further into to positive sheet ability moderation will of strengthen XXXX, This our cash rate the will to we expect flow. growth balance business but deliver the supports position natural growth our free gas moderate. production

our allocation dividend We have annually committed XXXX; the remain continuing to through customer high-return our investing by our multiyear We primary to XXXX. value. to growing first, reducing assets; a maximizing clearly shareholder times XX% focused of to meet defined capital third, policy XX% base leverage below second, in X on in objectives: and needs three

We our our Since while one all introduction set XX% the time turn are have deploy high-return in attractive allocation steadfast successfully coverage. we dividend maintaining by the dividend the the taken capital reducing advantage increasing annually leverage in our also our at while to and peer-leading by capital ratio policy, assets, opportunity commitment to concurrently of of and this policy. same

investments our our our the from to and to the sheet. ahead would we've growth. gas focus we moderating to strengthening pattern investments look natural production will on As made continue follow balance policy benefit will further our of capital expect business capital XXXX, We

be flow the customers. expectation to our that expected XXXX XXXX roughly generate current half early This XXXX. that free is As it growth our of is our to result, in of capital or our ability while XXXX needs a support meeting core late will cash

and and value the our our that To our shareholders. meet objectives of And on track. we allocation capital team the market date, on multiyear on for based create will confident, strength is policy I'm the

supportive compression also The for place compression which purchase acquisition recent in of backdrop Compression, highly Elite horsepower. supported our of included the currently XXX,XXX

main and fee-based our this accretive horsepower midstream transaction the immediately contract strategic are on discussed, we're As acquiring agreements benefits: similar equipment applications, operations large backed by core is blue-chip with carries long-term, focused four that previously operations servicing to business, remarkably first, customers.

Second, we the economics. executed transaction and attractive

two from $X expect annual equipment of $XX EBITDA including adjusted We acquired to highly nature the confidence million annualized of generate complementary cost the of our high approximately platforms. million synergies

acquisition reflects the low growth. Third, risk

announcement to It to allows we've immediately seen continue benefit compression experience. to shareholders strongest our excited ever I on our As price perhaps something activity we're the adding our from level about. of stated and horsepower call, the market transaction reasonable XXX,XXX a robust at feet we is

geographic transaction also our this portfolio in footprint. density addition the assets Ford fourth, adding across and into our position Permian, highly The in a the basin enhanced extends And complementary of to the Utica. further Eagle our Marcellus while leadership Elite results in the position

assets Midstream our further of to concurrent our related $XX to experience The sell and standardizes compression and will addition million non-core the of fleet of to substantial industry approximately Board team. Archrock's of add Harvest Hildebrand horsepower Directors for compression XX,XXX Jeff

complementary the Elite nature by the this supported Archrock business week. Work the team's to well and transaction closing experience our integrate anticipate And is later we of progressing our businesses. into

such the what in every acquisition we box We’ve in benefits a deal. that high-value consolidation a of and to our long discussed forward look execute of checks excited industry we're

the to like second call I'd our for to review quarter Now, over of Doug turn performance. a

Doug Aron

to was improved X% and quarter million, compared totaled primarily quarter an everyone. an Brad and increase period. another EBITDA pricing. second results. good of driven of $XXX financial million, Thanks, operating delivered $XXX for increase morning, quarter Archrock of Adjusted for year the over quarter second Revenue higher strong XX% of the the by XXXX horsepower second prior

of increase second compared quarter the million, $X XXXX for XXXX. to $XX in substantial of the income second was Net million quarter a

impairment, XXXX $X and The of $X million costs. second of of asset quarter million debt $X million extinguishment included approximately of transaction-related long-lived

The second of $X debt million and XXXX million transaction-related included quarter costs. of extinguishment of $X asset million of long-lived impairment, $X

to revenue benefiting price discipline This drive We from increase rate costs. horsepower In increases, from of in our consecutive Xth operating lower which resulted execution of strong contract XX% the improved gross higher quarter operations maintenance XXXX. increases practices, and for by helped million fleet. our up across operations, the margin second XX% January team from quarter achieved implemented $XXX and

In $XX AMS focus in our customers to our compared We quarter. capital. aftermarket in services million managing on million the $XX in segment, second ongoing prior quarter capital quarter delayed we revenue of the spending second some their slowdown year's reported business experienced as during

end the total. for Our expectation of the focus year of from the at line up totaled period XX%. XX% the gross prior drove our high at with to of the XX% second second on million improvement margins compared quarterly year's end in and -- to high million in between quarter for in XX% our $XX year prior year with margin -- full full quarter $XX last quarter's and SG&A last year business

second the bringing totaled $XXX million quarter CapEx For growth CapEx year-to-date $XX growth million. to

XXXX As the capital half-weighted. $XX Maintenance for to million CapEx growth first total will for our be quarter of $XX second half we've previously XXXX was indicated XXXX the the million. of bringing first

asset in quarter. second the from million sales $XX generated We

non-standardized our half of our sales on to or assets assets roughly expect driven removals first million by in we the areas. XXXX, the independent of $XX sale we million of with full asset fleet For focus asset underperforming, $XX to year continue completed the honing of for non-growth Harvest, and continued

capital the to funded our second a growth quarter assets. $XX exited $X.X compared total billion, portion as of up quarter the with We high-return debt approximately first million with compression we of supports that debt

remained at the unchanged leverage second X.X For quarter, times.

million, position. to exited leverage-reduction closely We down available $XXX manage on to of continue the quarter. prior of goals. and committed liquidity page with from at remain end the quarter And the about our We to our firmly million achieve $XXX capital

in related Archrock and we of for the Midstream, to compression As non-core sale recently Harvest Brad Elite $XX and million $XXX common issued of shares. newly million a mentioned, announced approximately cash Compression equipment acquisition

This XXXX, X including leverage-neutral as dividend well times coverage as and below funding and structure track between through XXXX. on dividend keeps in of achieve times to more financial targets, of XX% XX% our X growth than of annual leverage us

recently annualized prior over increase or of year $X.XXX We quarter. and the per quarter second $X.XX of quarter declared share prior XX% an dividend reflecting basis, a on an

of $XX total closing payment a latest Our on million. and dividend yield of a X.X% represents yesterday's dividend based price

quarter second XX dividend X. on be on August August Our all shareholders of to paid record will

totaled, to second for of X.X second quarter available leading the dividend million, coverage times. dividend of Cash for XXXX quarter $XX

to pleased We return, goal while are of on deliver dividend attractive capital extremely coverage. our maintaining

As Archrock XXXX release of updated annual acquisition, in to include XX,XXX the earnings of Harvest. and the XXX,XXX yesterday, its Elite divestiture you horsepower our to saw guidance horsepower

results, five these of from Our reflects months transactions. revised guidance

year revenue XXXX $XXX raising be range million. to $XXX contract million. adjusted $XXX we in are full the million to to to million We our EBITDA expect $XXX In operations, of range,

We basis expect XX% of as between February Elite's, in compared fleet. a to the XX year, midpoint high-quality of from point gross increase guidance we margins addition benefit the at XX% for the our at

In XX% to our of full business, complete $XXX lowered deferring internally. with million, are XX%. million and has or The to $XXX maintenance our margins slowed electing AMS customers revenue we range maintenance market to gross year to AMS

the Right of as half we activity similar half. now first to anticipate compared levels the the back in year

expect We between $XXX $XXX million total to million. SG&A and

is to half increase discussed for above for $XXX run is increase assets. a to on account an to the million, year Depreciation expected increasing expense expense around rate and in Interest million. due initiatives. our amortization $XXX the compression second be technology higher slightly The is to spending expected previously be

on basis, guidance of the includes within range provided Elite are to we also is to $XXX $XXX This And tightening our earlier the business. Turning million range a this to range, updated addition year the full capital, million. year.

will $XXX XXX,XXX We $XXX to our additions. range million. capital new XXX,XXX are horsepower growth narrowing of support This roughly between million and

Our program to substantially XXXX customers. is new-build committed

throughout be midstream gas very and will natural horsepower oil with that extending field applications, growth part a investments this plays. the production support to large on are focused portion early small And into XXXX, tied stable These placed key the XXXX of XXXX. and units in horsepower

compared to $XX approximately fleet. larger CapEx, our slightly million fall prior for account CapEx and the technology to million expect million for $XX for spend million to from year. vehicles $XX million, estate guidance, and real midpoint less is This than up we guidance vehicles, and to forecasted. prior Maintenance consists of on $XX this a year our to be originally decrease to technology expected forecasted about our the between is $XX at as of to is capital which Other

approximately anticipate our to as will we year, $XX sale the assets to will million We'll excluding be prune asset XXXX also and support continue transaction of for used equipment our capital optimize for portfolio expenditures. the raise Harvest, not non-core targeted returns meeting which with the

open for open questions. like questions now Bob? the -- to we'd the that, With line

Operator

Instructions] Watson be Thank proceed we’ll Energy. first your a you. Our this with comes At time, [Operator Please Simmons question. question session. conducting question-and-answer with from John

John Watson

Thank you. Good morning.

Brad Childers

morning. Good

John Watson

don't want commentary, hear XXXX. what CapEx to correctly? is important growth you expectation belabor I I half it's that the point of your Brad, your XXXX Did you but spent in because for said

Brad Childers

You did.

John Watson

Okay. That's hear. great to

and positively. that's received prudent very think be will I Great.

and the into maybe of incorporate if the type And for services practices other might the on from Secondly I Archrock's units? forward Elite's be Archrock's that's call moving about provided Elite services believe acquisition, on you some Elite of not their into those talk learn correct, customers. here, legacy -- customers? first view I incorrect to lessons can for they but can you If

Brad Childers

we Sure. on means. the Look what and our with our into which operations to the that Archrock to I'd integrate is, It's the services quality that customers experience they Elite same say customers high first accustomed. work become continue critical thing

we Elite a the have course is they already. lot large Hilcorp with Elite of also with customers with And that transaction do Marathon. of In and and customer that a customer base, concentration two business the

quality the consistent. the so and is field execution And in business continuity the they to going quality will remain experience of the

that depending capabilities may reflected our with operational with level they Archrock have the rate. call of be where number within other are customers want offer What meet we customers performed -- to operational services need there our to different offer we with met, we services that overall Second, is a It's them. first in organization then throughout that of the staff already them the we where of fully want call members. we offer to first our they team and And wish upon they customers operation. the and throughout customer

to So this is not new us.

services We've to Elite provide been to continue really it. to We've going customer there. we do to base as great Most done today. customers importantly, we're Archrock's the

John Watson

for about some Is to hear. strength in that have last one great you murmurings implications me. new That's We've phenomenon given among if the that seen? Thanks for so units orders packagers. slowdown that in And all One can the talk Brad. current market? the of something a heard of you the

Brad Childers

Yes.

packager. we're So not a

for the information that moderated horsepower time we has reduced the about the as that direct where frames weeks of But units, down we have now well ago, they information. large than And slowed that timeframe this as from don't do market we So believe delivery somewhat six packagers. greater ahead. intelligence has use on months XX Where the previously XX week have we're in activity delivery we and were substantially were. in reflected to as and as order at that OEMs the XX

is record XXXX XXXX the LNG coming levels that market expecting even that What in that through I ahead believe being at to maybe and less then second XXXX XXXX. is in on reflects gas this growth in with looking production natural XXXX, there's

activity in only by less forecast natural of we it half to to gas prior growth but is others growth. that are is in that growth helpfully order so to support the Growth been be years. years. appear It upon responsible in expect that ahead, the very those two already has based approximately does started us amount the production going what to market And moderate has

the that. I maybe packagers think so And order with the reflecting activity

in they The XXXX there digest it that lot equipment I put XXXX that ordered have the and operating. to would of and suggest get second dynamic, out is infrastructure place people is a and in

every we're is not record for ahead. year record going market year the year a to all year reflect going we activity a its production is that believe in And not be I infrastructure demand to see be equipment. in so seeing, to what and production is And every moderating actual the

John Watson

back. That congrats on is turn it another Thanks helpful. very guys I'll strong quarter. and

Brad Childers

Thanks.

Doug Aron

John Thanks,

Operator

with your Burke Johnson comes question proceed & from Please Company. next Our Daniel question. Rice with

Daniel Burke

morning, guys. Good Yeah.

Brad Childers

morning. Good

Daniel Burke

natural amongst you've I'm increased excuse low that at changes prices churn just me, look at Gas different Lift? increased spot lower the – not you about either – we any in like or interest observed even Lift can Gas level, interest talk even but factors about and As Lift base? in prevailing field electric or customer your prevailing prices or thinking compression Gas gas

Brad Childers

Sure.

is is and directly really in oversupply So the on on price. fleet gas short-term the tend a XX% that our that current basis volatility, levered gathering That storage gas gas on we and storage annual business pricing production, Lift built. to XX% current But drivers fortunately some or really to production for combination more levered and withdrawal it's Gas of short-term drivers and by be natural units short-term price our the XX% or levels, basis, much marketplace about a spot our for immediate impacted that's impacting and levels. right injection, less a for natural levels, now. production, indicating oil us, of capacity, significantly on because production on have of

So plays. gas investment of from especially our really what in in levels the volatility production immune and which price, we're but the anticipated very growth is that – oilier it's required, that, not that is some operation, totally of more level from about very it's associated drives a natural with distant gas much we're

would so in level impacted in out into even put only that gas now of a the expect we is horsepower of is as see which to higher reduced operating. it to our minority And it is hasn't if market, we business activity stock much. that our this a I'd plays, The have dried caveat sustained

impact. some be So there could still

show yet. that up seen haven't We

Daniel Burke

Any compression, Right. Brad? comments electric on

Brad Childers

a markets Colorado combination regulations pressure that into And in really a independent the really on motor that natural That's management, the units. – some what a fleet with We hasn't and have translated like see more tightest electric states. fleets, a instead our the few available of haven't drive we in notably for We of the motor in do compression. with way. those that development and most is in as electric the dynamic on the in Wyoming. the gas-driven do pumping compression. preference electrification customers electric right that's where by We We supported of see country in see have primarily it going nothing units of now move environmental Sure. drive some see has broad-based emissions together outside totally focus

Daniel Burke

be performance then guess year percentage quarter, QX that to that for the touch identified, look margin. my second Got in step-up question applied the and all I Thanks. or XX%. it. nice over Archrock sustainable. as see And just but But that on was and job to forward? over individual core Not it Elite contribute my over sort you as general should half follow-up forward would was QX, the cost that a sort Can in the and just see of well margin over just margin the as think in of on hold those as ops. guidance this achieved you look base contract you business of levels Doug no Encouraging we any the in I we next to year?

Doug Aron

within the guidance our to indication of in We're to that word the And price few the organization range Sure. over tightened XXXX, the that's we can about continued of execution in that we've increases band. field. at in how field price continue confidence to our the of beginning as as combination XX% the well we year is the is between support excited performance to XX% XX% obtained the in pretty we that and perform stability years, and gave marketplace range. see the we going the our XX% well in managing last as Look for a execution the

range. business we're what just to in for We're So optimistic investors. stay that the that that about our our not we within can means returns excited

Daniel Burke

you, Thank guys. it. Got

Doug Aron

Yes.

Operator

Jeremy your comes question question. from proceed Please next with Our Tonet JPMorgan. with

Unidentified Analyst

maybe cost Charlie. kind that your is This of operations, reduction contract moving XX%, back If could that of little afternoon. kind margins into on XX% I of good can the forward? how plays more go around you quarter-over-quarter? color give expectations that there a kind And on to to just keep Hey, margins

Brad Childers

it really There it up to operates. on we year mystery discussed would this returns performing going see business delivers pricing gross that on units manage But is it. XX% we we in in the Sure. good that We've range no in for field. investments the in our really that as the past XX% into the the range to we margin platform in on to this our should real business a move obtain work which ability what to we to based saw guided and XX% be and that forecast the to execute given

a benefited management of material QX also the parts performance in much together of XX% QX about XX% bit little we moving of and quarter. oil had not some a and -- spending sequentially the saw were from to had the first the great We move with as comp quarter-over-quarter in as that do per workers' spend thrilled that or cost also absence of management in we quarter. in -- from cost parts with that sequential to lube we It

good on gross sustain our story into range. up I ability is this pretty added think margin to those our what so And in performance

Unidentified Analyst

That's helpful.

updated end guess end? towards maybe you're five I full feels I'm good of months of Elite position of the don't else if guidance maybe year push range pretty like towards up the top expectation thinking the to temper be set even the you've kind then including contribution that that top there from it kind kind given. So to about I is of a anything know may in of

Doug Aron

we're can we also to things from Look the Doug. you have issue. range XX% is guidance but giving in you move gave I'd KG, on maintenance an level. have Not be can that that that that which appreciating it it’s XX% unit quarter-to-quarter if trying given Charlie, comfortable Yes. say, to a

is our here a control the but terms at horsepower, what been reason end the year. pushed in something picture can pricing. to That's what's bigger Within we've that we adding we've But done very in market do responsibly business. a substantially and in top tried same grown once look the with strong we look I typically by think of we've

about the forecast put there. gross end top So the coin, side side And that. we've – of on then that we in on the good very margins that our very the feel focused we're of sort OpEx flip on

best don't I by way. in manage work take believe mean put I Brad to talked to that to might for and end the maintenance team and range costs can strong little want you it hope going that on appreciate We to it model cost But in from at guys about we the at that come we're is from strong within but responsible of that away that it in results and differently. that's coming focus our lower the can point. the deliver drive those this that We range? come doing parts, perspective have what costs of in a the top the management each a do guess quarters. bit to continue

Unidentified Analyst

enough. fair That's

during for year still Maybe understand last I How your you've customers Any activities more for this kind of in push-out these really there? services. that on out? maintenance of little it's push aftermarket but Just color on there. some color me much year. for this bit can maybe maybe activities customer’s possible delaying one a still guidance come to changed And

Brad Childers

Yes.

notoriously up to fact me short-term markets. forecast is of on let a business It's in very the challenging quarterly just on that this owing turnaround First different to a activity bunch basis. the --

And so, within range is challenge. this forecasting tight a a

in go your agree chosen we lower of customers maintenance, lot of business, As forever. for some activity occurring defer some gas do expressing you're see in some of our have this in But that gas today, of and our the to natural price which some rationalization can't plays, field. the that AMS dry thesis environment cost it management their with we have a on

we've much the And objective go is is to to conflict to perspective. with to the only were of other to some of jobs will back back. in from a difficult how that out turn of segment. in some point for coming I of we're point the somewhat out is margin believe revenue okay But which objective it? thing come our gross one, it I'd as chosen profit, profitability away forecast. in growing margin where lower We improve that from quest very the we're The dollars

amount The money make thing a not less that for work business. less same the of ability to and is bad with risk

to as our going continue to well push we're activity So, somewhat upon rebound but profit it, to a full to it's as to manage going going customer see depend willingness is when -- to going bit or thought initiated keep than to XXXX our desire push in we a little that number to year revenue we check the profit guidance. is in more

Unidentified Analyst

Great. Thanks. That’s it for me.

Operator

Our next question comes question. from your Thomas Curran with B. with Riley. Please proceed

Thomas Curran

guys. morning, Good

Brad Childers

morning. Good

Thomas Curran

is estimated quite your struck is initial Elite, just me $X conservative. million synergy For cost

offer spent and cases you savings? your best scenario million, incremental annualized newco, month $X for year the Elite for modeling synergies? And as which you cost case evaluating harvesting where would exceed consider you've another potential that that most to Now what's you seem

Brad Childers

range the is call same the synergies which on had Well, our we guidance reaffirmed as million, at at $X even today's announcement. in we transaction

that. of that already of more SG&A feel Most some as that we the as have well need we Archrock. we the comfortable activities at level, very is So, do at office SG&A as back senior with to platform activities not repeat established

not by other a than as that we But have by already way, SG&A of at more the Archrock. add expanding incremental has horsepower, without can well as how We grow amount base work love it's an -- organically the yet. transaction strength and that There that business. leverage tremendous since. acquisition, we by And we that a and lot through haven't whether the the gives well efficiency a we done the increment closed can cool been

a excited tight would $X going with think I is say of brings runs the the about we're to And modest achievable. be the It's And synergy this out. well fairly finally, platform. shop. number one very very why that leaned to that our organization we that smaller is continue Elite one our And organization reasons is a that to more million that's of value the synergy,

Thomas Curran

Okay. positive you I'll Watson's reach the privy for goal Shifting to as investment been you there. capital, like aggressive where the or gears second newbuild growth provided to on you've you and as from provide target to working us for the XXXX. CapEx for to Could move else XXXX. sneak I'll something response John with committed you've to in? especially downshift excising have keep any mode you XXXX, you've you'd discipline

Doug Aron

Yeah.

Doug. working it is cash, I specifically were of capital that inventory, capital a segment it of question? balance you as segment So, payables, was that think about mean what sort Tom mean I -- guess in working receivables, I of I this envisioning the

Thomas Curran

for a and you for extent capital days to have XX drag trailing into the payable, or minimize on in would for the imposes focus maybe capital, month manage in entirety, working working working DSOs, ranges the it its flow. you target capital each you heading cash great, its where Or a net have just entirety, capital goals net working do basis? percentage on either revenue, that as What Just are XXXX? be you To as Doug? targets look of say,

Doug Aron

sheets and got outstanding look -- XX and it's think certainly outstanding and look with I customers you the balance our ratings. most the We revenues look Well, start customers question. you sales an outstanding credit we've within some top day as talk Yes. about let's with for part, interesting at

basis And capital that. on most can part a can better. DSO so is sure -- we're It I I'm and the a I working be drag. But through particularly our think day-to-day guess of don't everybody's good. about some working in being of terms for the

talked what in about and equipment more this revenue always CapEx our the coming -- business. a of in starting pretty working up in about conversion There's past to from think we've we will on necessary is new certain As capital is amount be that quick.

I will for And given overall there that balances. much have into working balances. you be to horsepower I as hard to have here guess got I receivable necessity anticipate reduce we a capital We've But inventory and reduce we of as the wouldn't before material not I amount amount always we're even tell of those worked carrying some would just those in CapEx, try outstanding carrying change quite even XXXX of the the there.

Thomas Curran

compressor then for Archrock ever And Do foresee I you to uniform wake the Chart configuration moved standardized Brad believe Air-X-Changers from Industries' of in and risks exchanger Hanover any or maybe air Harsco? merger. opportunities acquisition of you Helpful. toward since Universal to coolers. Okay. related

Brad Childers

job don't. has to Chart's Air-X-Changers been indications mean that out good in to reliable any done don't very communication and we engaging time and us reaching of quality in of and great continuity very giving us a forward. that that going a going service see change way. of the Chart long the I is vendor business has and No, for management a very of we

to us. negative so expect that a for be don't And we

Thomas Curran

Good questions. hear. for to my Thanks fielding

Brad Childers

you. Thank

Operator

There are no more questions.

Now, I'd Mr. like back the to over to for turn call Childers remarks. final

Brad Childers

for And thank joining morning. everyone our you call this operator. Thanks

ahead stands for and today up, I'd close about wrapping what Before a where I for lies excited I remain few Archrock we're about think where business, going our key like reasons. to When this. with

strong The in We're to on we're demand delivery attractive equipment new grow structural market and investing growth our opportunities to support remains business. taking profitably the experiencing. providing

Our safe delivering employees of reliable continue customers and services behalf our world-class execute day-in team and day-out. to on compression efficient of

for we and generating shareholders. remain focused And attractive on finally, returns value our

company's I'm all that improved we're We in positions the the and proud that lie returns and achieving are one of and growth ahead. for strongest history prospects of the

I to on look call. again talking our you earnings to everyone. Thanks forward quarter third

Operator

conference. today's concludes This

we this your And participation. lines you your time. disconnect may thank You at for

Archrock (AROC) 30 Jul 192019 Q2 Earnings call transcript