Archrock Inc (AROC) 2023 Q3 法說會逐字稿

Good morning, and welcome to the Archrock's Third Quarter 2023 Conference Call. Your host for today's call is Megan Repine, Vice President of Investor Relations at Archrock. I will now turn the call over to Ms. Repine. You may begin.

早安，歡迎參加 Archrock 2023 年第三季電話會議。今天電話會議的主持人是 Archrock 投資者關係副總裁 Megan Repine。我現在將把電話轉給雷平女士。你可以開始了。

Thank you, Nadia. Hello, everyone, and thanks for joining us on today's call. With me today are Brad Childers, President and Chief Executive Officer of Archrock; and Doug Aron, Chief Financial Officer of Archrock. Yesterday, Archrock released its financial and operating results for the third quarter 2023. If you have not received a copy, you can find the information on the company's website at www.archrock.com.

謝謝你，納迪亞。大家好，感謝您參加今天的電話會議。今天與我在一起的有 Archrock 總裁兼執行長 Brad Childers；以及Archrock 財務長Doug Aron。昨天，Archrock 發布了 2023 年第三季的財務和營運業績。如果您還沒有收到副本，可以在該公司網站 www.archrock.com 上找到該資訊。

During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, based on our current beliefs and expectations as well as assumptions made by and information currently available to Archrock management team. Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.

在本次電話會議中，我們將根據 1934 年《證券交易法》第 21E 條的含義，根據我們當前的信念和預期以及 Archrock 管理團隊所做的假設和目前掌握的信息，做出前瞻性陳述。儘管管理階層認為此類前瞻性聲明中反映的預期是合理的，但不能保證此類預期將被證明是正確的。

Please refer to our latest filings with the SEC for a list of factors that may cause actual results to differ materially from those in the forward-looking statements made during this call. In addition, our discussion today will reference certain non-GAAP financial measures, including adjusted EBITDA, gross margin, gross margin percentage, free cash flow, free cash flow after dividend and cash available for dividend. For reconciliations of these non-GAAP financial measures to our GAAP financial results, please see yesterday's press release and our Form 8-K furnished to the SEC.

請參閱我們向美國證券交易委員會提交的最新文件，以了解可能導致實際結果與本次電話會議期間做出的前瞻性聲明中的結果有重大差異的因素清單。此外，我們今天的討論將參考某些非公認會計準則財務指標，包括調整後的 EBITDA、毛利率、毛利率百分比、自由現金流、股息後自由現金流和可用於股息的現金。有關這些非 GAAP 財務指標與我們的 GAAP 財務表現的調整表，請參閱昨天的新聞稿和我們向 SEC 提供的 8-K 表格。

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

我現在將電話轉給 Brad，討論 Archrock 第三季的業績並提供我們業務的最新情況。

Thank you, Megan. Good morning, everyone, and thank you for joining our call. We delivered excellent financial and operational results during the third quarter, which included setting several performance records. This continues to be a tremendous market for compression. But more importantly, the results Archrock delivered in the third quarter and the consistency and execution we've delivered all year, reflect the changes we've driven across the business to enhance our fleet, customer service and profitability to drive improved returns for our investors.

謝謝你，梅根。大家早安，感謝您加入我們的通話。我們在第三季取得了出色的財務和營運業績，其中包括創下了多項業績記錄。這仍然是一個巨大的壓縮市場。但更重要的是，Archrock 在第三季交付的業績以及我們全年交付的一致性和執行力，反映了我們在整個業務中推動的變革，以增強我們的機隊、客戶服務和盈利能力，從而為我們的投資者帶來更高的回報。

Let me hit a few of the highlights from the quarter. In the third quarter, we doubled our net income to $31 million compared to the third quarter of 2022. We generated adjusted EBITDA of $120 million, which was a quarterly record for Archrock and was up 7% sequentially. The increase was driven primarily by positive pricing and profitability momentum in our contract operations segment. I'm also proud to share that we achieved an important balance sheet milestone during the quarter, as we drove our leverage ratio to 3.8x, and we intend to drive leverage even lower next year. We continue to increase shareholder returns. We paid a quarterly dividend per share of $0.155, which was up 7% compared to a year ago, all while maintaining robust dividend coverage of 2.6x. In addition, we continued repurchasing shares under our share buyback authorization.

讓我來談談本季的一些亮點。與 2022 年第三季相比，第三季的淨利潤翻了一番，達到 3,100 萬美元。調整後 EBITDA 為 1.2 億美元，這是 Archrock 的季度記錄，環比增長 7%。這一增長主要是由合約業務部門的積極定價和盈利勢頭推動的。我還很自豪地告訴大家，我們在本季度實現了重要的資產負債表里程碑，我們將槓桿率提高到了 3.8 倍，並且我們打算明年將槓桿率進一步降低。我們不斷提高股東回報。我們支付的季度股息為每股 0.155 美元，比去年同期增長 7%，同時保持 2.6 倍的強勁股息覆蓋率。此外，我們根據股票回購授權繼續回購股票。

I'd now like to share my perspective on the market. Archrock is positioned in a unique segment of the natural gas value chain. And we believe compression market fundamentals have never been better. Similar to pipelines, we're an energy infrastructure company, supplying a critical piece of infrastructure needed to move gas to market with the majority of our large horsepower equipment deployed in natural gas gathering applications. We run a fee-based business, which is closely aligned to natural gas production volumes and not natural gas prices, so we're not exposed to the shorter cycle volatility facing drilling, pressure pumping and completions-focused services.

現在我想分享一下我對市場的看法。 Archrock 位於天然氣價值鏈的獨特部分。我們相信壓縮市場的基本面從未如此美好。與管道類似，我們是一家能源基礎設施公司，提供將天然氣輸送到市場所需的關鍵基礎設施，我們的大部分大馬力設備部署在天然氣收集應用中。我們經營的是收費業務，該業務與天然氣產量而非天然氣價格密切相關，因此我們不會面臨鑽井、壓力泵送和完井服務所面臨的較短週期波動的影響。

Looking at the outlook for natural gas production, again, the biggest driver of our business, we expect to see consistent and modest growth rates in the low single-digits on an annual basis. This is being driven by 2 dynamics. First, we continue to see strong investment in associated gas plays in the U.S. like the Permian and the Eagle Ford, where the majority of our operating fleet is located. We also believe the recent U.S. Shell mega deals announced by major integrated producers reinforce the competitiveness and longevity of U.S. Shell. Second, our customers are [planning] critical infrastructure to support growing LNG exports from the U.S., further extending the attractive fundamentals for our industry well into the future.

再次審視天然氣生產的前景，天然氣生產是我們業務的最大推動力，我們預計每年將保持低個位數的持續溫和成長率。這是由兩個動力驅動的。首先，我們繼續看到對美國伴生氣區的強勁投資，例如二疊紀和伊格爾福特，我們的大部分營運船隊都位於這些地區。我們也認為，主要綜合生產商最近宣布的美國殼牌大型交易增強了美國殼牌的競爭力和壽命。其次，我們的客戶正在[規劃]關鍵基礎設施，以支持美國不斷增長的液化天然氣出口，進一步將我們行業的有吸引力的基本面延續到未來。

As natural gas demand and production grows, we're experiencing unprecedented tightness in the compression market, which we believe is driven by structural and industry-wide changes to capital allocation practices. Priorities have changed. With capital discipline permitting -- permeating the energy sectors, companies look to drive moderated and profitable growth as well as consistent free cash flow to return to shareholders. We're seeing this capital discipline by our producer and midstream customers, other compression companies and even our equipment providers. We believe this powerful combination of expected continued growth in natural gas production plus the commendable discipline we're seeing across the industry, supporting comparably steadier and more durable up cycle for compression and for Archrock.

隨著天然氣需求和產量的成長，我們正在經歷壓縮市場前所未有的緊張，我們認為這是由資本配置實踐的結構性和全行業變化所推動的。優先事項已經改變。在資本紀律允許的情況下——滲透到能源產業，公司希望推動適度的獲利成長以及持續的自由現金流以回報股東。我們看到我們的生產商和中游客戶、其他壓縮公司甚至我們的設備提供者都遵守這種資本紀律。我們相信，天然氣產量的預期持續增長加上我們在整個行業中看到的值得稱讚的紀律的強大結合，支持壓縮和 Archrock 相對穩定和更持久的上升週期。

Moving on to our contract operations segment. we've positioned our compression platform, selling non-strategic assets and investing in highly standardized, large midstream compression units. The benefits are clearly beginning to pay off in our results. Fleet utilization exited the third quarter at 96%, another record for Archrock. We also delivered nearly 650,000 in active horsepower growth excluding non-core active asset sales of 35,000 horsepower. The growth was primarily driven by new build equipment deliveries as we have a few idle units remaining to redeploy and as we continue to experience historically low levels of equipment returns from the field. When we do receive a notice of a customers' determination to return in units, most of that equipment is booked for its next job before it ever stops in its current location.

繼續我們的合約營運部門。我們已經定位了我們的壓縮平台，出售非戰略資產並投資高度標準化的大型中游壓縮裝置。這些好處顯然已經開始在我們的成果中得到回報。第三季機隊利用率達到 96%，是 Archrock 的另一個紀錄。我們也實現了近 65 萬馬力的活躍馬力成長，不包括 35,000 匹馬力的非核心活躍資產銷售。這一成長主要是由新建設備交付推動的，因為我們還有一些閒置設備需要重新部署，而且我們的現場設備回報率繼續處於歷史低點。當我們確實收到客戶決定批量返回的通知時，大多數設備在停在當前位置之前就已預訂用於下一次作業。

On booking activity, robust customer demand is showing no signs of slowing down, and our 2024 new-build capital is fully committed. With lead times for new equipment still around a year, the window to order compressors for delivery in 2024 is closing, and our customers are beginning to plan for their 2025-horsepower needs.

在預訂活動方面，強勁的客戶需求沒有放緩的跡象，我們的 2024 年新建資本已完全投入。由於新設備的交貨時間仍約為一年，訂購 2024 年交付的壓縮機的窗口即將關閉，我們的客戶已開始規劃其 2025 匹馬力的需求。

On pricing, we've now achieved sequential increases in our monthly revenue per horsepower for 8 consecutive quarters. Over this time period, our monthly revenue per horsepower is up over 17%. The pricing trajectory remains positive, and we expect to continue to make progress gradually moving rates up on our installed base next year. We delivered an impressive third quarter gross margin percentage of 64%, which was above our annual guidance range and is now approaching peak performance during prior cycles. This is due to a few factors.

在定價方面，我們現在已經連續 8 個季度實現了每馬力每月收入的連續成長。在此期間，我們每馬力的月收入成長了 17% 以上。定價軌跡仍然樂觀，我們預計明年將繼續取得進展，逐步提高我們安裝基礎的價格。我們第三季的毛利率達到了令人印象深刻的 64%，高於我們的年度指導範圍，目前正接近之前週期的峰值表現。這是由於幾個因素造成的。

First, as I just highlighted, we've repositioned our compression platform for a more stable and profitable future. Second, the price increases we're implementing this year are catching up with the cost increases we experienced over the last few years. And third, we've maintained a consistent and unwavering focus on cost management as we grow modestly and profitably with our customers.

首先，正如我剛才強調的，我們重新定位了我們的壓縮平台，以實現更穩定、更有利可圖的未來。其次，我們今年實施的物價上漲趕上了過去幾年的成本上漲。第三，隨著我們與客戶一起實現適度成長和獲利，我們始終堅持不懈地專注於成本管理。

Turning to aftermarket services. We saw steady and strong performance. We saw solid demand and activity on the service side of the business during the quarter and profitability remains substantially higher than 2022 levels as our team focuses on targeting higher quality and higher-margin activity. From a capital allocation standpoint, we remain on track to deliver the enhanced framework that we laid out on last quarter's call, which is underpinned by our commitment to generate free cash flow.

轉向售後服務。我們看到了穩定而強勁的表現。我們在本季看到業務服務的強勁需求和活動，由於我們的團隊專注於更高品質和更高利潤的活動，因此獲利能力仍遠高於 2022 年的水平。從資本配置的角度來看，我們仍有望實現上季電話會議中提出的增強框架，這是我們對產生自由現金流的承諾的基礎。

Based on our current outlook for 2024, we remain set up to grow our dividend with a 2024 target of 5% and maintain a dividend coverage ratio of approximately 2x. We currently drive our leverage ratio even lower to a range of 3 to 3.5x. Fund our growth capital expenditures, which we currently anticipate to be approximately $160 million in 2024. And this capital plan preserves the ability to continue to buy back additional shares.

根據我們目前對 2024 年的展望，我們仍將增加股息，2024 年的目標為 5%，並維持約 2 倍的股息覆蓋率。目前，我們將槓桿率降至 3 至 3.5 倍的範圍內。為我們的成長資本支出提供資金，我們目前預計 2024 年約為 1.6 億美元。這項資本計畫保留了繼續回購額外股票的能力。

In summary, 2023 is shaping up to be a banner year for our company, and we believe we are set up for an extended period of strong and sustained performance. Natural gas production fundamentals remain durable. The compression industry is as tight as we've ever seen due to capital rationalization by both the energy industry and our supplier and Archrock's competitive and financial flexibility is as strong as it's ever been.

總而言之，2023 年對我們公司來說將是標誌性的一年，我們相信我們已經做好了長期保持強勁和持續業績的準備。天然氣生產基本面仍持久。由於能源產業和我們的供應商的資本合理化，壓縮產業的緊張程度達到了前所未有的程度，而 Archrock 的競爭和財務靈活性也一如既往地強勁。

With that, I'd like to turn the call over to Doug for a review of our third quarter and to provide additional color on our outlook for the rest of the year.

說到這裡，我想將電話轉給道格，讓他回顧我們的第三季度，並為我們今年剩餘時間的前景提供更多的資訊。

Thank you, Brad, and thanks to all of you for joining us this morning. Let's take a look at our summary of our third quarter and then cover our financial outlook. Net income for the third quarter of 2023 was $31 million. This included a long-lived and other asset impairment of $3 million and restructuring charges of $600,000. We reported adjusted EBITDA of $120 million for the third quarter of 2023, a quarterly record for Archrock. Underlying business performance was strong in the third quarter as we delivered higher total gross margin dollars on both a sequential and annual basis. Results further benefited from approximately $3 million in third quarter asset sale gains.

謝謝布拉德，也謝謝大家今天早上加入我們。讓我們來看看第三季的總結，然後介紹我們的財務前景。 2023年第三季淨利為3,100萬美元。其中包括 300 萬美元的長期資產減損和其他資產減損以及 60 萬美元的重組費用。我們報告 2023 年第三季調整後 EBITDA 為 1.2 億美元，創下了 Archrock 的季度記錄。第三季的基本業務表現強勁，因為我們的總毛利率較上季和年度均較高。業績進一步受益於第三季約 300 萬美元的資產出售收益。

Turning to our business segments. Contract operations revenue came in at $208 million in the third quarter, up 3% compared to the second quarter of 2023 and 22% versus the year ago period. Operating horsepower and pricing both increased sequentially. Compared to the second quarter of 2023, we grew our gross profit by nearly $7 million or 6%, resulting in a gross margin percentage of 64%. This was up 150 basis points compared to the second quarter and nearly 600 basis points year-over-year.

轉向我們的業務部門。第三季合約營運收入為 2.08 億美元，比 2023 年第二季成長 3%，比去年同期成長 22%。營運馬力和定價均連續成長。與 2023 年第二季相比，我們的毛利成長了近 700 萬美元，即 6%，毛利率達到 64%。與第二季相比成長了 150 個基點，年增了近 600 個基點。

In our aftermarket services segment, we reported third quarter 2023 revenue of $46 million, consistent with second quarter levels and up 6% compared to the third quarter of 2022. Second quarter AMS gross margin of 20% was down sequentially but was consistent with annual guidance and up from 300 basis points versus the third quarter of 2022. Growth capital expenditures in the third quarter totaled $45 million. This was consistent with our previous guidance that capital investment for the year would be more first half weighted. Through the end of the third quarter, we've deployed $175 million of growth CapEx and high-return projects to meet the strong customer demand we're seeing, primarily in associated gas basins such as the Permian.

在售後服務領域，我們報告2023 年第三季營收為4,600 萬美元，與第二季水準一致，比2022 年第三季成長6%。第二季AMS 毛利率為20%，季減，但與年度指導一致與 2022 年第三季相比成長了 300 個基點。第三季的成長資本支出總計 4,500 萬美元。這與我們先前的指引一致，即今年的資本投資將更專注於上半年。截至第三季末，我們已部署了 1.75 億美元的成長資本支出和高回報項目，以滿足我們所看到的強勁客戶需求，主要是在二疊紀等伴生天然氣盆地。

Of note, we've raised approximately $55 million so far this year through nonstrategic equipment sales to support this new build investment program. Maintenance CapEx for the third quarter was $24 million compared to $27 million during the second quarter. Make Ready and overhaul CapEx was down sequentially. We exited the quarter with total debt of $1.6 billion and variable rate debt continues to represent approximately 20% of our total long-term debt.

值得注意的是，今年到目前為止，我們已透過非策略性設備銷售籌集了約 5,500 萬美元來支持這項新建投資計畫。第三季的維護資本支出為 2,400 萬美元，而第二季的維護資本支出為 2,700 萬美元。準備就緒和大修資本支出依序下降。本季結束時，我們的債務總額為 16 億美元，可變利率債務繼續占我們長期債務總額的約 20%。

In addition, we maintained strong available liquidity of $439 million. We reduced our leverage ratio to 3.8x, down from 4.3x in the third quarter of 2022. Achieving a leverage ratio of less than 4x has been a goal since before I joined Archrock and we are excited to deliver this important company milestone during the quarter. We have more progress to make and believe it's prudent to move the goalposts even further, particularly in a high interest rate environment.

此外，我們保持了 4.39 億美元的強勁可用流動性。我們將槓桿率從 2022 年第三季的 4.3 倍降至 3.8 倍。自從我加入 Archrock 之前，實現槓桿率低於 4 倍一直是我們的目標，我們很高興在本季度實現這一重要的公司里程碑。我們還有更多進展需要取得，並相信進一步推進目標是謹慎的做法，特別是在高利率環境下。

As Brad mentioned, we currently anticipate taking our leverage ratio lower in 2024 to a range of 3 to 3.5x. We recently declared a third quarter dividend of $0.155 per share or $0.62 on an annualized basis. This is consistent with second quarter levels and up 7% year-over-year. Our latest dividend represents a solid yield of nearly 5% based on yesterday's closing price. Cash available for dividend for the third quarter of 2023 totaled $63 million leading to impressive quarterly dividend coverage of 2.6x.

正如 Brad 所提到的，我們目前預計 2024 年槓桿率將降低至 3 至 3.5 倍。我們最近宣布第三季股息為每股 0.155 美元，年化股息為 0.62 美元。這與第二季的水平一致，年增 7%。根據昨天的收盤價，我們最新的股息代表著近 5% 的穩定收益率。 2023 年第三季可用於股息的現金總計 6,300 萬美元，季度股息覆蓋率高達 2.6 倍，令人印象深刻。

In addition to increasing the dividend this quarter, we repurchased approximately 354,000 shares for $4.4 million at an average price of $12.49 per share. This leaves approximately $43.5 million in remaining capacity for additional share repurchases. Turning to our outlook. We continue to see great execution year-to-date compared to our plan, and we have great confidence in the compression market fundamentals, our ability to execute and our financial flexibility.

除了增加本季的股息外，我們還以 440 萬美元的價格回購了約 354,000 股股票，平均價格為每股 12.49 美元。這留下了大約 4,350 萬美元的剩餘能力用於額外的股票回購。轉向我們的展望。與我們的計劃相比，我們今年迄今的執行情況仍然良好，我們對壓縮市場的基本面、我們的執行能力和財務靈活性充滿信心。

Looking at adjusted EBITDA guidance, we expect to come in close to the high end of our most recent guidance range of $430 million to $450 million. This implies relatively flat adjusted EBITDA in the fourth quarter, which reflects continued strength in our contract operations segment offset by seasonal weakness in our AMS business and approximately $3 million in third quarter asset sale gains that are not expected to recur.

從調整後的 EBITDA 指引來看，我們預計將接近我們最新指引範圍 4.3 億至 4.5 億美元的上限。這意味著第四季度調整後的EBITDA 相對持平，反映了我們的合約業務部門的持續強勁，抵消了AMS 業務的季節性疲軟以及第三季度資產銷售收益（預計不會再出現）約300 萬美元。

Turning to capital. On a full year basis, we continue to expect total 2023 capital expenditures to be around $295 million. Of that, we are holding the line on growth CapEx of $200 million primarily for new build horsepower to meet key customer demand.

轉向資本。就全年而言，我們繼續預期 2023 年資本支出總額約為 2.95 億美元。其中，我們將成長資本支出控制在 2 億美元，主要用於新建馬力，以滿足關鍵客戶的需求。

In summary, we are focused on finishing the year on a high note and are planning for an even better 2024. This includes our expectation for enhanced profitability, improved financial returns and positive free cash flow while remaining committed to our differentiated capital allocation framework with shareholder return at the top of the list. We hope you will join us for what we believe will be an exciting and rewarding ride.

總而言之，我們的重點是高調結束這一年，並計劃迎接更好的2024 年。這包括我們對盈利能力增強、財務回報改善和自由現金流積極的預期，同時繼續致力於與股東的差異化資本配置框架返回列表頂部。我們希望您能加入我們，我們相信這將是一次令人興奮且有益的旅程。

I will now turn the back -- the call back over to Nadia for question and answers.

現在我將把電話轉回給納迪亞進行提問和解答。

(Operator Instructions) And our first question goes to Jim Rollyson of Raymond James.

（操作員說明）我們的第一個問題是向 Raymond James 的 Jim Rollyson 提出的。

Congrats on another great impressive quarter moving forward. Brad, just maybe as we think about growth going forward, obviously, you're probably getting closer to maxing out on utilization. And as you mentioned, so incremental horsepower adds, which you're going to spend $160 million next year will be part of that equation. And the rest of the equation seems like from a top line perspective will be how your pricing moves from here, and it's been a pretty steady trend upward. I'm trying to understand maybe as you sit today and look across the portfolio of the fleet at your most recent contracts and the implied pricing and some of your maybe older contracts that haven't repriced or moved up with an inflator basis, trying to understand the spread there to kind of figure out how much upside room there is just from today's market if you mark your fleet to the market today.

恭喜又一個令人印象深刻的季度向前發展。布拉德，也許當我們考慮未來的成長時，顯然，您可能越來越接近利用率最大化。正如您所提到的，明年您將花費 1.6 億美元增加馬力，這將成為該等式的一部分。從頂線的角度來看，等式的其餘部分似乎將是您的定價如何從這裡開始變化，並且這是一個相當穩定的上升趨勢。我試圖理解也許當你今天坐下來瀏覽機隊的投資組合時，看看你最近的合同和隱含的定價，以及一些可能沒有重新定價或以充氣機為基礎上漲的較舊的合同，試圖如果您將您的車隊標記為今天的市場，那麼了解那裡的價差就可以算出今天的市場還有多少上漲空間。

Thanks, John. We believe there is a substantial upside in the profitability to the business. And when you think about profits, you cited 2 of the 3 items that will continue to move the needle for our performance. The first is incremental horsepower growth as we grow our fleet responsibly with great investments at very solid returns for our investors. One that you missed and I'll come to pricing third, one that you missed is we remain ambitious about managing our costs with the investments we've made in technology to improve the performance of our fleet. We believe it's also going to enhance the profitability of our fleet. We believe that, that is an investment that's going to yield incremental improvements and returns for years to come, and we intend to exploit that aggressively in 2024, just as we have in 2023, but also in 2024 and beyond.

謝謝，約翰。我們相信該業務的獲利能力有很大的上升空間。當您考慮利潤時，您提到了將繼續推動我們業績的 3 個項目中的 2 個。首先是馬力的增量成長，因為我們負責任地透過大量投資來發展我們的機隊，為我們的投資者帶來非常可觀的回報。您錯過的一件事，我將談到第三個定價，您錯過的一件事是，我們仍然雄心勃勃地透過在技術方面的投資來管理我們的成本，以提高我們機隊的性能。我們相信這也將提高我們機隊的獲利能力。我們相信，這項投資將在未來幾年帶來漸進式改善和回報，我們打算在 2024 年積極利用這一點，就像我們在 2023 年所做的那樣，而且在 2024 年及以後也是如此。

And then finally, on pricing, we certainly have room to bring the installed base up to a more current spot pricing over time. And we're ambitious about what we can do with those pricing moves. So we believe these are 3 solid levers that are going to be available for us to drive returns for our investors in this market.

最後，在定價方面，隨著時間的推移，我們當然有空間將安裝基礎提高到更新的現貨定價。我們對如何利用這些定價舉措抱持雄心。因此，我們相信這三個堅實的槓桿將可供我們為這個市場的投資者帶來回報。

Understood. I didn't miss cost. That was going to be my next question. Is there anything -- it sounds like there's still levers to pull to improve that side. So historically speaking, and this seems like a different time than most of history, at least as far as I've been following this space. With pricing trajectory you have today and obviously the momentum behind it, and where your costs are today with more things you just kind of alluded to improving that potentially going forward, where do you think margins can go? We're kind of back in the historical peaks or pretty close to that. And I'm just curious, is this 64-ish percent margin? Can that continue to kind of inch higher over the next few quarters? Or how do you think about that?

明白了。我沒有錯過成本。這將是我的下一個問題。有什麼辦法嗎——聽起來仍然有辦法改善這一方面。所以從歷史上來說，這似乎是一個與大多數歷史不同的時期，至少就我一直在關注這個領域而言是如此。考慮到你今天的定價軌跡，顯然還有背後的動力，以及你今天的成本，你只是提到了更多的東西來改善未來的潛力，你認為利潤率會走向何方？我們又回到了歷史高峰或非常接近歷史高峰。我只是好奇，這個利潤率是 64% 左右嗎？在接下來的幾個季度裡，這數字還能繼續上漲嗎？或者你對此有何看法？

We believe the investments we've made and the market we have ahead of us support a very sustained margin level like we're experiencing currently. And I'm ambitious that we can move margins higher. Stepping back and looking at the historic returns in the compression space and candidly, in the energy space overall, returns have to go up. When you step back and look at the cost factors to our business, acquisition of equipment, those costs are up, labor costs are up, lube oil is up, parts pricing is up. And we have to improve the profitability of the business to catch up with those returns and then exceed them because very critically, cost of capital is up.

我們相信，我們所做的投資和我們面臨的市場支持我們目前所經歷的非常持續的利潤水平。我雄心勃勃地希望我們能夠提高利潤率。退後一步，看看壓縮領域的歷史回報率，坦白說，在整個能源領域，回報率必須上升。當你退一步看看我們業務的成本因素、設備採購時，這些成本上升了，勞動成本上升了，潤滑油上漲了，零件價格上漲了。我們必須提高業務的獲利能力，以趕上這些回報，然後超越它們，因為非常關鍵的是，資本成本上升了。

And in a space with extreme capital discipline right now to attract capital and to deliver returns that attract capital, our returns have to go up to. So we believe there is room in the energy industry. and certainly in compression to continue to improve profitability to accomplish those improved returns.

在目前資本紀律極為嚴格的領域，為了吸引資本並提供吸引資本的回報，我們的回報必須上升。所以我們相信能源產業還有空間。當然，也要壓縮以繼續提高獲利能力，以實現更高的回報。

Makes perfect sense. And then just one last question. with leverage kind of already getting to your original. In the range of your original year-end goal. And obviously, next year, you're moving envelope down to 3 to 3.5x. Once you get to that leverage level that you're looking for, what then -- because that's obviously consuming some of your cash flow to get your leverage where you want it to be and your dividend coverage is 2.6x, and seemingly growing. Just kind of curious how you think about allocating capital beyond 2024 when you get your leverage where you want it to be.

很有道理。最後一個問題。槓桿已經達到你原來的水準了。在你原來的年終目標範圍內。顯然，明年，您將信封降低至 3 至 3.5 倍。一旦你達到了你想要的槓桿水平，那麼接下來該怎麼辦——因為這顯然會消耗你的一些現金流來讓你的槓桿達到你想要的水平，而你的股息覆蓋率是2.6 倍，而且似乎還在增長。只是有點好奇，當你的槓桿達到你想要的水平時，你會如何考慮在 2024 年之後分配資本。

We are a returns-focused investor. We're going to look to return and invest our cash where we're going to yield the best return. That includes the increase in the dividend for the benefit of our investors. That includes looking at share repurchases for the benefit of our investors. And with the managed liquidity and the objective of maintaining a free cash flow objective through the cycle and year-over-year. We -- as we grow that cash flow, we'll have more to invest in the market if the returns on the equipment are there also.

我們是注重回報的投資者。我們將尋求回報並將現金投資於能夠產生最佳回報的地方。這包括為了我們投資者的利益而增加股息。這包括為了我們投資者的利益考慮進行股票回購。並透過管理流動性和在整個週期和逐年保持自由現金流目標的目標。隨著現金流的成長，如果設備的回報也存在的話，我們將有更多的資金投資於市場。

Our next question goes to Steve Ferazani of Sidoti.

我們的下一個問題是向 Sidoti 的 Steve Ferazani 提出的。

Brad, appreciate all the color on the call. I feel like I probably asked this last quarter, but worth asking again. utilization rates now a new record didn't seem like it could go higher. Just a question as we get into a seasonally higher demand area, and I'm sure your asset turnover has to be at near record lows. Is it safe to say that utilization is sustainable because you're not going to be returning compression into the winter months. Is that a fair way to look at it?

布拉德，欣賞通話中的所有色彩。我覺得我可能在上個季度問過這個問題，但值得再問一次。利用率現在創下新紀錄，似乎不可能再更高了。只是一個問題，當我們進入季節性需求較高的區域時，我確信您的資產週轉率必須接近歷史低點。可以肯定地說，利用是可持續的，因為您不會在冬季恢復壓縮。這是一個公平的看待它的方式嗎？

Yes, it is. What we said in the past, I can say again, and that is that there is not enough compression market, a compression equipment in the market today to meet current production needs. Not to mention the growing production that we see coming from the expansion of LNG exports. So we see high utilization rates continuing, we see incremental growth ahead to support that level of production. And so we think utilization can maintain and candidly can even continue to tighten from here based on the demand we see in the market today.

是的。我們過去說過的話，我可以再說一遍，那就是現在市場上沒有足夠的壓縮設備來滿足當前的生產需求。更不用說我們看到液化天然氣出口擴大所帶來的產量成長。因此，我們看到高利用率持續存在，我們看到未來的增量成長將支持這種生產水準。因此，我們認為，根據我們今天在市場上看到的需求，利用率可以維持，甚至可以從這裡繼續收緊。

I think I know the answer to this, but I'll ask it anyway. Obviously, in more drilling-related sectors, we've seen smaller operators getting more aggressive pricing and pushing down margins. Clearly, the numbers show it's not happening here. Any pressure from smaller operators or is everybody to your previous answer, operating at such full capacity that there's -- that's just not any kind of a near-term risk?

我想我知道這個問題的答案，但我還是會問。顯然，在更多與鑽井相關的領域，我們看到較小的營運商獲得了更激進的定價並壓低了利潤。顯然，數字表明這種情況並沒有發生在這裡。來自較小運營商的任何壓力，還是每個人都對您之前的答案表示滿意，即滿負荷運營，這不是任何短期風險？

There's definitely pricing competitiveness in the marketplace that we experienced. But with a high-quality group of customers, we have that are looking at growth and the need to expand their compression operations. They understand -- and with the inflation that we've experienced in the past, the market has been digesting and understanding of the rate increases that we've put in place to date. We've had a good level of accomplishment in our overall rate book.

我們經歷過的市場上肯定存在定價競爭力。但我們擁有一批高品質的客戶，他們正在尋求成長並需要擴大他們的壓縮業務。他們理解——隨著我們過去經歷的通貨膨脹，市場一直在消化和理解我們迄今為止實施的升息。我們的整體評分錶取得了很好的成績。

So it's not that there's not competition there is, but it's that with the growth in the market and recovery from inflation and the need to improve returns. The pricing that we've accomplished and the pricing that we expect to continue to drive in 2024, we believe will be accepted by the market to boost those returns.

因此，並不是說不存在競爭，而是隨著市場的成長、通膨的復甦以及提高回報的需要。我們相信，我們已經完成的定價以及預計 2024 年繼續推動的定價將被市場接受，從而提高回報。

Can I -- Steve, if I could just emphasize a portion of Brad's answer there, right? If we go back to end of 2019, end of 2020, I think we said this on our last call, we've seen nearly a 40% increase in the cost of new build large horsepower equipment from something in the $900 a horsepower to approaching $1,200 a horsepower. That increment means that -- be it customers that are ordering their own equipment with the foresight of doing so, again, with long lead times for that equipment. A potential new entrant, which we haven't yet seen or anyone else in order to get any kind of a recovery is going to have to be pricing it at what we see as current rates. And so again, I think one of the really attractive parts of the Archrock story is 3.6 million, 3.7 million horsepower installed base that in a large -- in a lot of cases was acquired at a much different time frame. We think that continues to attract a higher price. And as Brad talked about, that upside for '24 and beyond. I think the likelihood of somebody coming in and cutting price just would be destroying value or destroying capital.

我可以 - 史蒂夫，如果我可以強調布拉德的答案的一部分，對吧？如果我們回到 2019 年底、2020 年底，我想我們在上次電話會議上說過，我們已經看到新建大馬力設備的成本增加了近 40%，從每馬力 900 美元增加到接近每馬力1,200 美元。這種增量意味著——無論是那些有遠見訂購自己的設備的客戶，同樣，該設備的交貨時間也很長。我們還沒有看到一個潛在的新進入者，或者其他任何人為了獲得任何形式的復甦，都必須按照我們認為的當前價格定價。再說一遍，我認為 Archrock 故事中真正有吸引力的部分之一是 360 萬、370 萬馬力的裝機基礎，在很多情況下，這些裝機基礎是在非常不同的時間範圍內獲得的。我們認為這將繼續吸引更高的價格。正如 Brad 所說，24 世紀及以後的優勢。我認為有人進來並降價的可能性只會破壞價值或破壞資本。

That's helpful. If I could just get one last one in. Just on maintenance CapEx came down this quarter. Is there much idle capacity left to make ready? Or what would you expect trends being that you're going to have to maintain a larger fleet going forward theoretically into next year?

這很有幫助。如果我能得到最後一個就好了。本季僅維護資本支出就下降了。是否仍有大量閒置產能可供準備？或者您預計明年理論上您將必須維持更大的機隊的趨勢是什麼？

We still have about 100,000 horsepower that could be made ready and go to work over the right time frame. But we will not, and we do not expect to have the same level of Make Ready expense flowing through maintenance CapEx that we experienced in the first half of 2023.

我們還有大約 100,000 匹馬力可以準備好並在適當的時間範圍內投入使用。但我們不會，而且我們預計維護資本支出中的 Make Ready 費用也不會達到 2023 年上半年的水平。

(Operator Instructions) Our next question goes to Selman Akyol of Stifel.

（操作員說明）我們的下一個問題是 Stifel 的 Selman Akyol。

So let me just start with in terms of spot pricing, if you were to characterize it versus 6, 9 months ago, how is that trending?

那麼，讓我從現貨定價方面開始，如果你要描述它與 6、9 個月前的情況，那麼趨勢如何？

No, let me expand on that a bit. We find that we are in a very aggressive pricing posture now for reasons we've already discussed on the call, so I won't go into all of them, Selman. But just catching up with original equipment cost for new builds, catching up with parts, labor, lube and the fact that cost of capital has increased, has justified a significant amount of price reclamation in the energy space and in compression that we and you can see our competitors also are benefiting from. We do not see the ability to raise prices changing or abating. The slope of the curve may start to flatten a bit, but we still are very positive that we can see more pricing gains from our installed base in 2024, and that's still ahead of us.

不，讓我稍微擴充一下。我們發現，由於我們已經在電話會議中討論過的原因，我們現在處於非常激進的定價態勢，所以我不會詳細介紹所有這些，塞爾曼。但是，只要追上新建建築的原始設備成本，追上零件、勞動力、潤滑油以及資本成本增加的事實，就證明了我們和您可以在能源領域和壓縮領域進行大量價格回收的合理性看到我們的競爭對手也從中受益。我們認為提價的能力不會改變或減弱。曲線的斜率可能會開始稍微趨於平緩，但我們仍然非常樂觀地認為，我們可以在 2024 年從我們的安裝基礎上看到更多的定價收益，而且這一目標仍然遙遙領先。

By the way, let me expand on one point that (inaudible). I wanted to expand on one point, which is that One of the really interesting aspects of this high inflation phase that we just went through, that is yet not fully appreciated, and you can see it in the pricing and returns that we're going to achieve in the future. is the value of our investments that we made ahead of this inflationary period, the value of our fleet has gone up substantially and we expect to claim improved returns off of those great investments that we made before this high inflation environment kicked in.

順便說一句，讓我擴展一下這一點（聽不清楚）。我想擴展一點，那就是我們剛剛經歷的這個高通膨階段真正有趣的方面之一尚未得到充分認識，你可以在我們正在進行的定價和回報中看到它來實現未來。是我們在這個通貨膨脹時期之前所做的投資的價值，我們機隊的價值已經大幅上升，我們預計我們在這個高通貨膨脹環境開始之前所做的那些偉大投資會獲得更高的回報。

Understood. And then if I think about how much of your fleet is left to reprice, how would you say that?

明白了。然後，如果我考慮一下您的機隊還有多少需要重新定價，您會怎麼說？

We estimate that still 2/3 of our fleet can be repriced over the next 12 months. Part of that comes in the form of units that roll-off term. Part of it comes in the form of units that are under a major strategic alliance with our customer base and has pricing mechanisms in there, some of which are indexed and some of which are just negotiated. So -- but that allows us to keep the pricing fresh on our fleet, and it's about 2/3 that will be repriced over the next 12 months.

我們估計，未來 12 個月內仍有 2/3 的車隊可以重新定價。其中一部分以滾存期限單位的形式出現。其中一部分以單位的形式出現，這些單位與我們的客戶群建立了主要策略聯盟，並具有定價機制，其中一些是索引的，另一些只是協商的。所以，但這使我們能夠保持我們機隊的最新定價，並且大約有 2/3 的機隊將在未來 12 個月內重新定價。

Understood. And so this is ultimately where I wanted to get to. How -- I guess, with your focus on costs, how does your gross margin not keep from expanding from here?

明白了。這就是我最終想要達到的目標。我想，由於您對成本的關注，您的毛利率如何不從這裡開始擴大？

We are very ambitious about our ability to continue to improve our gross margin and the profitability of our business based upon both factors, price increases that we expect are ahead, as well as cost opportunities that we are attacking vigorously inside the company.

基於我們預期的價格上漲以及我們在公司內部大力進攻的成本機會這兩個因素，我們對繼續提高毛利率和業務盈利能力的能力非常抱有雄心。

I think -- well, well -- we're definitely not going to give you a 2024 guidance today, because we're still in the process of putting that plan together. But look, I think we said 8 consecutive quarters of sequential revenue growth. From where we sit today, from the conversations we're having with our customers, we certainly expect that streak to continue. And you got to leave us something exciting to talk to you about when we report Q4 early next year.

我認為——好吧——我們今天肯定不會給你們 2024 年的指導，因為我們仍在製定該計劃的過程中。但看，我認為我們說的是連續 8 個季度的營收季增。從我們今天的立場來看，從我們與客戶的對話來看，我們當然希望這種勢頭能持續下去。當我們明年初報告第四季時，您必須給我們留下一些令人興奮的話題。

Okay. wanted to just pivot over to the balance sheet and some comments you made there. You talked about your goal of getting down to 3%, 3.5%, and you talked also about wise things you do in a higher interest rate environment, complete agreement there. I guess my question is, and I'm thinking about interest expense even with lower leverage unless you actually take your debt levels down, your interest expense would be, would it be so in order to lower that? Are you guys planning on paying down additional debt? Or do you -- are you seeing your leverage just being achieved through higher EBITDA?

好的。我只想轉向資產負債表以及您在那裡發表的一些評論。您談到了將利率降至 3%、3.5% 的目標，也談到了在較高利率環境下所做的明智之舉，大家對此達成了一致。我想我的問題是，即使槓桿率較低，我也在考慮利息支出，除非你實際上降低了債務水平，否則你的利息支出會是這樣，為了降低這一水平嗎？你們打算償還額外的債務嗎？或者您認為您的槓桿作用只是透過更高的 EBITDA 實現的？

So a couple of comments there. And I think you were -- you coined a phrase that I've now used since then when we were [last out] on the road with you, Selman. We are not just planning to take leverage down, as you call it, the Texas way by growing EBITDA, right? But we have actually repaid $230 million or so worth of debt since 2019. In -- and that has been a meaningful part of the leverage reduction. So yes, as we look forward and think about EBITDA growth into next year and the use of free cash flow thereafter. We've said that the 3 things that we'll look at there are new growth CapEx expenditures, increasing our dividend and then leverage reduction and/or share buybacks, right?

所以有一些評論。我認為你創造了一個短語，從那時起我就一直在使用這個短語，當時我們[最後一個]和你一起上路，塞爾曼。我們不只是計劃透過增加 EBITDA 來降低槓桿率（正如您所說的那樣），對嗎？但自 2019 年以來，我們實際上已經償還了價值約 2.3 億美元的債務。這是降槓桿的一個有意義的部分。所以，是的，當我們展望並思考明年的 EBITDA 成長以及此後自由現金流的使用時。我們已經說過，我們將關注的三件事是新的成長資本支出、增加股息，然後是減少槓桿和/或股票回購，對嗎？

And so we'll continue to evaluate all of those. And again, I think when comparing us certainly to other midstream companies and definitely to the rest of the compression peers, we're a best-in-class provider there. We have flexibility that some of our peers don't have. And we will look to find the right balance of all of those different possibilities of what to do with free cash flow.

因此，我們將繼續評估所有這些。再說一次，我認為，當我們與其他中游公司以及其他壓縮同行進行比較時，我們是那裡最好的提供者。我們擁有一些同行所沒有的彈性。我們將尋求在利用自由現金流的所有不同可能性之間找到適當的平衡。

Understood. And I guess you mentioned conversations on 2025 are starting. Just how are those going? And I'm just kind of curious, meaning they're very open to seeing continued price increases out that far, still hearing things are going to be tight. Is there just any insight you can kind of give on what's going on there?

明白了。我猜你提到 2025 年的對話正在開始。那些進展如何？我只是有點好奇，這意味著他們非常願意看到到目前為止價格持續上漲，但仍然聽說情況將會緊張。您能否對那裡正在發生的事情提供一些見解？

Demand is high for 2024. Demand signals overall, pricing and horsepower amounts and unit amounts, those discussions with customers are as strong at the beginning of '24 as they were in 2023. And in fact, I think, in some cases, they are earlier because with the tightness of the market, our customers have become accustomed to planning further in advance than they ever have. So it's a robust market and it looks to be very demand and growth-oriented continuing through 2024.

2024 年的需求很高。整體需求訊號、定價、馬力數量和單位數量，與客戶的討論在 24 年初與 2023 年一樣強烈。事實上，我認為，在某些情況下，它們是由於市場緊張，我們的客戶已經習慣比以往更提前規劃。因此，這是一個強勁的市場，看起來需求和成長導向將持續到 2024 年。

We have no further questions. I'll now hand back to Mr. Childers for any final remarks.

我們沒有其他問題了。現在我將把最後的發言交還給奇爾德斯先生。

Thank you, everyone, for joining our fourth quarter call this morning. Our performance was exceptional this quarter. And with Archrock's enhanced platform and financial flexibility, we are well positioned to capture opportunities presented by the current market. I look forward to updating you on our progress next quarter. Thank you, everyone.

謝謝大家今天早上參加我們的第四季電話會議。我們本季的表現非常出色。憑藉 Archrock 增強的平台和財務靈活性，我們能夠很好地抓住當前市場帶來的機會。我期待著向您通報下季度我們的最新進展。謝謝大家。

Thank you. This now concludes today's call. Thank you all for joining. You may now disconnect your lines.

謝謝。今天的電話會議到此結束。感謝大家的加入。現在您可以斷開線路。