Archrock Increases Quarterly Cash Dividend

Rhea-AI Summary

Archrock, Inc. (AROC) has declared an increased quarterly dividend of $0.165 per share of common stock, or $0.66 per share on an annualized basis. This represents a 6.5 percent increase over the third quarter 2023 dividend and a 10 percent increase over the fourth quarter 2022 dividend. The decision reflects confidence in compression outlook, financial flexibility, and capital allocation capabilities. Archrock aims to improve financial returns and return capital to shareholders. The dividend will be paid on February 13, 2024, to stockholders of record on February 6, 2024.

Financial Analyst

The announcement by Archrock, Inc. of an increased quarterly dividend is a decisive signal to the market, reflecting the company's financial health and management's confidence in its future performance. The 6.5 percent increase from the previous quarter and 10 percent year-over-year growth are noteworthy, particularly in the context of the energy sector's volatility. This action is likely to be well-received by investors, as it suggests a stable and potentially growing income stream.

Dividend hikes are often interpreted as a positive indicator of a company's profitability and cash flow stability. However, it is crucial to examine the payout ratio and whether the increased dividend is sustainable in the long term. The mentioned dividend coverage ratio of more than 2.0 times indicates that the company earns at least twice as much as it pays out in dividends, which supports sustainability. The leverage ratio between 3.0 and 3.5 times, while within industry norms, should also be monitored to ensure that debt levels remain manageable and do not threaten future dividend payments or the company's financial stability.

Market Research Analyst

Archrock's strategic focus on financial flexibility and capital allocation capabilities is central to its value proposition in the competitive energy infrastructure market. The company's emphasis on operational execution and its transformed platform suggests a commitment to efficiency and adaptability in a sector that is subject to fluctuating commodity prices and regulatory changes.

An increased dividend may also serve as a competitive differentiator, attracting income-focused investors and potentially increasing the stock's demand. However, investors should consider the broader market trends, including energy prices and demand for compression services, which could impact Archrock's performance and, consequently, its ability to maintain or grow dividends in the future.

Economist

The dividend increase by Archrock must be contextualized within the larger economic environment. The energy sector's performance is closely tied to macroeconomic factors, including industrial activity, energy prices and interest rates. A robust dividend payout amidst uncertain economic conditions could be a testament to Archrock's operational resilience and strategic planning.

However, it is important to recognize that an aggressive dividend policy could also constrain the company's ability to reinvest in growth opportunities. In a capital-intensive industry, maintaining a balance between rewarding shareholders and funding capital expenditures is critical for long-term competitiveness and market share expansion.

HOUSTON, Jan. 25, 2024 (GLOBE NEWSWIRE) -- Archrock, Inc. (NYSE: AROC) (“Archrock”) today announced that its Board of Directors has declared an increased quarterly dividend of $0.165 per share of common stock, or $0.66 per share on an annualized basis. The fourth quarter 2023 dividend will be paid on February 13, 2024 to all stockholders of record on February 6, 2024.

The fourth quarter 2023 dividend per share amount represents an increase of 6.5 percent over the Archrock third quarter 2023 dividend level and an increase of 10 percent over the Archrock fourth quarter 2022 dividend level.

“Our robust results continue to demonstrate the power of our transformed platform and strong operational execution. The decision to increase our dividend reflects our confidence in the outlook for compression as well as Archrock’s industry-leading financial flexibility and capital allocation capabilities,” said Brad Childers, Archrock’s President and Chief Executive Officer.

“Our increased dividend is supported by a consistent and prudent expected dividend coverage ratio of more than 2.0 times and leverage ratio of between 3.0 and 3.5 times by year end 2024.

“We remain committed to improving financial returns and returning capital to our shareholders and look forward to updating you on our 2024 outlook during our fourth quarter 2023 earnings call in February,” concluded Childers.

About Archrock

Archrock is an energy infrastructure company with a primary focus on midstream natural gas compression and a commitment to helping its customers produce, compress and transport natural gas in a safe and environmentally responsible way. Headquartered in Houston, Texas, Archrock is the leading provider of natural gas compression services to customers in the energy industry throughout the U.S. and a leading supplier of aftermarket services to customers that own compression equipment. For more information on how Archrock embodies its purpose, WE POWER A CLEANER AMERICA™, visit www.archrock.com.

Forward-Looking Statements

This press release contains forward-looking statements, which include statements about Archrock’s future financial performance and dividends. These statements are not guarantees of future performance or actions. Forward-looking statements rely on a number of assumptions concerning future events and are subject to risks and uncertainties. If one or more of these risks or uncertainties materialize, actual results may differ materially from those contemplated by a forward-looking statement. Forward-looking statements speak only as of the date on which they are made. Archrock expressly disclaims any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. A further list and description of risks, uncertainties and other matters can be found in Archrock’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, Archrock’s Quarterly Report on Form 10-Q for the quarters ended March 31, 2023, June 30, 2023 and September 30, 2023 and those set forth from time to time in Archrock’s filings with the Securities and Exchange Commission which are available at www.archrock.com.

For information, contact:

Megan Repine
Vice President, Investor Relations
(281) 836-8360
investor.relations@archrock.com

What is the increased quarterly dividend declared by Archrock, Inc. (AROC)?

Archrock, Inc. (AROC) has declared an increased quarterly dividend of $0.165 per share of common stock, or $0.66 per share on an annualized basis.

When will the fourth quarter 2023 dividend be paid to stockholders?

The fourth quarter 2023 dividend will be paid on February 13, 2024, to all stockholders of record on February 6, 2024.

What percentage increase does the fourth quarter 2023 dividend represent over the third quarter 2023 dividend?

The fourth quarter 2023 dividend represents an increase of 6.5 percent over the Archrock third quarter 2023 dividend level.

What is the outlook for compression mentioned in the announcement?

The decision to increase the dividend reflects confidence in the outlook for compression.

What is the expected dividend coverage ratio and leverage ratio by year end 2024?

The expected dividend coverage ratio is more than 2.0 times and the leverage ratio is between 3.0 and 3.5 times by year end 2024.