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HOUSTON - Archrock, Inc. (NYSE:AROC) has priced an upsized private offering of $700 million in senior notes with a 6.625% interest rate, maturing in 2032. The transaction is set to close on August 26, 2024, subject to customary closing conditions. Archrock Partners, L.P., a wholly-owned subsidiary of Archrock, along with Archrock Partners Finance Corp., will co-issue the notes.
Concurrently with this offering, the companies have initiated a tender offer to purchase up to $200 million of their 6.875% senior unsecured notes due in 2027. This tender offer is contingent on the successful completion of the notes offering.
The proceeds from the offering are earmarked to partially fund the acquisition of Total Operations and Production Services, LLC, to fulfill the tender offer, and cover related fees and expenses. Any remaining funds may be used for general corporate purposes, potentially including the repayment of existing debt under Archrock’s credit facility.
The acquisition of Total Operations and Production Services, LLC, which is not dependent on the offering, is part of Archrock’s expansion strategy. The senior notes have not been registered under the Securities Act of 1933 and will be available only to qualified institutional buyers and non-U.S. persons outside the United States.
In other recent news, Archrock, Inc. has seen substantial financial growth, with a reported net income increase to $34 million, up from $25 million in the same quarter of the previous year. The company's adjusted EBITDA also rose by 15% to $130 million. In a strategic move, Archrock has planned a $500 million senior notes sale through its subsidiary, Archrock Partners, L.P., with the proceeds intended for the acquisition of Total Operations and Production Services, LLC (TOPS).
This acquisition, valued at $983 million, is expected to bolster Archrock's market position and enhance earnings and dividends. Despite a slight cool down in dry gas plays, Archrock's majority presence in liquids-rich areas, particularly the Permian, and its pricing power are anticipated to continue driving positive business performance.
InvestingPro Insights
Archrock, Inc. (NYSE:AROC) has taken a significant step in its capital management strategy with the pricing of its $700 million senior notes offering. The move is timely as the company trades at a low P/E ratio relative to near-term earnings growth, currently standing at 21.4, which may appeal to value-oriented investors. Moreover, the company has a track record of maintaining dividend payments, having done so for 11 consecutive years, with a current dividend yield of 3.48%.
InvestingPro data shows that Archrock has experienced a solid revenue growth of 15.61% over the last twelve months as of Q2 2024, indicating a robust performance amidst its expansion endeavors. The company's gross profit margin stands at an impressive 57.09%, reflecting its ability to manage costs effectively while scaling its operations. Additionally, Archrock's return on assets is 5.15%, demonstrating the efficiency with which the company utilizes its assets to generate earnings.
Investors looking for more insights can find additional InvestingPro Tips on Archrock, including analysis on earnings revisions, profitability, and long-term returns. Currently, there are 9 additional tips available, which provide a deeper dive into the company's financial health and future prospects. For detailed analysis and further information, visit https://www.investing.com/pro/AROC.
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