Archrock, Inc.

Good morning. Welcome to the Arch Rock second quarter 2026 conference call. Your host for today's call is Megan Repine, Vice President of Investor Relations at Arch Rock. I will now turn the call over to Ms. Repine. You may begin.

Thank you, Erica. Hello, everyone, and appreciate you joining today's are joining us on today's call. With me today are Brad Childers, President and Chief Executive Officer of Art Rock, and Mohit Singh, Chief Financial Officer of Art Rock. Yesterday, we released our financial and operating results for the second quarter of 2026. If you have not received a copy, you can find the information on the company's website at www.artrock.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 trucks 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, adjusted EPS, adjusted net income, adjusted free cash flow, and adjusted free cash flow after 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 second quarter results and provide an update on our business.

Thank you, Megan, and good morning, everyone. Before we get into the quarter and our performance, I want to welcome Mohit Singh to ArchRock as our Senior Vice President and Chief Financial Officer. Mohit joined our team in July and brings more than 25 years of experience across the energy value chain. Mohit's public company experience, deep understanding of natural gas fundamentals, and strategic perspective will be valuable as we position ArchRock for its next phase of growth. Mohit, we're excited to have you on board. Now let me turn to our second quarter results. Against a constructive market backdrop, the quarter was outstanding and showcased the quality of our platform with excellent contract operations profitability, high utilization, significant free cash flow, low leverage, and continued dividend growth. These results demonstrate the resilience of our business model and the flexibility we have to balance high return growth while returning capital to shareholders. Let me share a few highlights from the quarter. We delivered EPS of 38 cents and adjusted EBITDA of $213 million in the second quarter, supported by solid contract operations fundamentals and disciplined execution across the business. Customer demand remains healthy. as evidenced by our continued high utilization, strong bookings for new starts, low unit stop activity, and a long-term agreement we signed with an existing strategic customer covering approximately 665,000 horsepower for midstream applications. We again delivered outstanding operating performance and profitability in contract operations, including utilization of 94.4% and our seventh consecutive quarter of adjusted gross margin above 70%, with adjusted gross margin at 71% in the quarter. We translated this performance into adjusted free cash flow of $67 million in the quarter, of which we returned 39 million to shareholders through dividends. Our board recently approved our fifth dividend increase in two years, underscoring the earnings and cash flow strength of our business. We ended the quarter with leverage of 2.6 times and dividend coverage of 3.1 times, both underscoring our continued financial strength and ability to balance investing and growth while returning capital to shareholders. Overall, we're very pleased with our second quarter performance and remain confident in the strength of our core business and long-term outlook. Last night, with our earnings release, we tightened our full-year 2026 adjusted EBITDA guidance range to reflect changes in assumptions for several largely external or timing-related factors, including near-term lube oil and make-ready cost pressures, AMS customer deferrals, and higher long-term incentive compensation driven by our increasing stock price. This does not reflect the change in demand fundamentals. As a result of these factors, our updated full year 2026 adjusted EBITDA guidance range is $865 million to $885 million, compared to our prior guidance range of $865 million to $915 million. Stepping back, our long-term confidence is supported by three key advantages, the right market,