Archrock, Inc.

ladies and gentlemen good morning welcome to the archrock fourth 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 thank you abby hello everyone and thanks for joining us on today's call with me today are brad childers president and chief executive officer of our truck and doug aaron

Chief Financial Officer of R-Track. Yesterday, R-Track released its financial and operating results for the fourth quarter and full year 2023, as well as annual guidance for 2024. If you have not received a copy, you can find the information on the company's website at www.R-Track.com. 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 our TRACS 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. 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 8K furnished to the SEC. I'll now turn the call over to Brad to discuss our truck's fourth quarter and full year results and to provide an update of our business.

Thank you, Megan, and good morning, everyone. Simply put, 2023 was a tremendous year for our truck. We exited the year with excellent fourth quarter performance, building significant momentum in utilization, pricing, and profitability. As we wrap up a record-breaking year for our company, I want to extend my congratulations to our dedicated employees on an extensive list of accomplishments. Among the highlights, our teams worked around the clock to meet our customer's sharp increase in demand. We grew our contract compression operating fleet by 214,000 horsepower, excluding sales of non-strategic assets. And we increased our exit fleet utilization by 300 basis points to an all-time high of 96%. As we met this demand, we recorded over 4.4 million man hours and drove 22 million miles. In this exceptionally busy environment, and despite a dynamic labor market, we continue to deliver industry-leading safety performance, achieving a total recordable incident rate of 0.05. And for the third consecutive year, we achieved zero lost time incidents. We more than doubled the net income and earnings per share compared to 2022, and we grew our adjusted EBITDA by 24% year over year. This step change in our earnings power enabled us to return more than $105 million in capital to our shareholders through two dividend increases and the initiation of a share buyback program. We also concurrently delivered outstanding dividend coverage of 2.4 times and drove our leverage ratio to an all-time low of 3.5 times. From the separation of the international and fabrication operations at the end of 2015 to the navigation of two significant market disruptions in 2016 and 2020 and our steps to high-grade our fleets, our technology, and our markets, I'm exceptionally proud of the strong market and financial position we've built through multiple years of effort to transform our company. This transformation not only contributed to record successes across multiple metrics in 2023, but we expect will benefit our operations, financial performance, and investor returns well into the future.