Archrock (AROC) 2026 年第三季法說會：接單量成長，重申財測

Archrock (NYSE: AROC) 發布 2026 年第三季獲利成長，主要歸功於合約營運表現強勁、機隊利用率高升以及成本控管得宜，抵銷了售後服務需求較疲軟的影響。

主要重點

• 淨利從 2025 年第三季的 7,120 萬美元（即每股 0.40 美元）增至 8,450 萬美元（即每股 0.48 美元）。調整後 EBITDA 從 2.209 億美元增至 2.284 億美元。
• 本季合約營運利用率收在 94.3%，調整後毛利率達 72%，連續第八個季度保持在 70% 或以上。
• 第三季是 Archrock 自 2023 年第二季以來新預訂量（bookings）最強勁的一季。今年以來累計預訂量成長 13%，其中二疊紀（Permian）、洛磯山脈（Rockies）、海恩斯維爾（Haynesville）及中大陸（Mid-Continent）地區的需求均有所擴大。
• 公司重申 2026 全年調整後 EBITDA 指引為 8.65 億至 8.85 億美元，總資本支出指引為 4 億至 4.45 億美元。
• Archrock 創造了 5,000 萬美元的調整後自由現金流，並發放了 4,100 萬美元的股利。季末槓桿比率為 2.5 倍，低於公司 3 倍至 3.5 倍的長期目標區間。
• 管理層維持 2027 年至 2030 年 14 億至 16 億美元的成長投資展望，主要用於採購約 100 萬馬力的大馬力及電動馬達驅動壓縮設備。

主要財務數據

業務與營運表現

合約營運仍是 Archrock 的主要獲利引擎。營運馬力較上季增加約 21,000 馬力，每馬力每月營收同比成長 4% 至 24.38 美元。儘管自去年同期以來出售了約 112,000 馬力的非戰略性營運馬力，營收仍實現成長。

潤滑油價格上漲以及重新啟動閒置設備的整備費用對成本造成壓力。Archrock 透過減少潤滑油採購量、控管零件與薪酬支出，以及將內部售後服務人力重新分派至合約營運（而非使用成本較高的外部人力），抵銷了部分影響。

今年以來，公司已接收約 125,000 馬力的設備，預計第四季將再接收約 50,000 馬力。管理層表示，部分設備應在第四季開始產生貢獻，預計 2027 年第一季將迎來額外的營收效益。

新預訂量較上一季增加，且今年以來累計成長 13%。二疊紀盆地錄得一年來最高的新預訂量，但僅占本季成長的 30% 至 40% 左右。洛磯山脈是 Archrock 最大的成長區域，海恩斯維爾與中大陸地區也進一步擴張。

由於客戶延後重大維修並減少零件採購，售後服務持續承壓。管理層強調獲利能力高於業務量，儘管營收下滑，該部門的調整後毛利率仍維持在 23%。

管理層指出，美國天然氣產量成長、二疊紀新管線輸送能力以及液化天然氣（LNG）需求是壓縮業務的長期驅動力。法說會上引用的產業預測顯示，與 LNG 相關的天然氣需求將從 2026 年的每天約 180 億立方英尺（Bcf/d）上升至 2030 年的每天 340 億立方英尺，並在 2035 年達到每天 400 億立方英尺。管理層亦將資料中心及其他工業用電戶視為潛在的新增需求來源。

管理層指引

Archrock 重申 2026 全年調整後 EBITDA 指引為 8.65 億至 8.85 億美元。管理層表示，合約營運表現與成本控管為該展望提供了支撐，同時已考量售後維修延後以及短期內潤滑油與整備成本壓力。

公司亦重申 2026 年總資本支出指引為 4 億至 4.45 億美元，其中包括：

• 成長性資本支出：2.5 億至 2.75 億美元
• 維護性資本支出：1.25 億至 1.35 億美元
• 其他資本支出：2,500 萬至 3,500 萬美元，主要用於新車購置

管理層預計將利用營運現金流及出售非戰略性資產所得資金來支應成長性投資。

在 2027 年至 2030 年期間，Archrock 繼續預計累計成長投資為 14 億至 16 億美元，用於採購約 100 萬馬力設備。公司計劃透過股利及適時進行的股票買回，回饋營運現金流的 25% 至 35% 給股東。

季度股利維持在每股 0.23 美元（年化每股 0.92 美元），較去年同期成長約 10%。股利支付覆蓋率為 3.8 倍。截至季末，Archrock 授權買回額度尚餘 1.132 億美元。

風險與關注焦點

• 卡特彼勒（Caterpillar）引擎的交貨週期仍維持在 180 週以上，需要 Archrock 提早許久下單。管理層表示交期已延伸至 2029 年，這拉長了從接單預訂到開始實現營收的時間差。
• 客戶持續延後售後維修，管理層指出復甦的時間點仍難以預測。
• 潤滑油價格及閒置設備重新上線的成本仍是近期的營運逆風，不過整備費用預計將隨時間有所趨緩。
• 第三季推銷及管理費用受益於股價變化所導致的長期激勵報酬變動。管理層提醒，不應將第三季費用視為常態運作率（run rate），並預估若股價無大幅變動，第四季推銷及管理費用將按季上升。
• 隨著整體能源與電力基礎建設投資週期的展開，管理層預期會出現波動，但表示天然氣及壓縮需求的底層基本面並無重大改變。

分析師問答亮點

預訂量與營收時間點：管理層表示，預訂量走強反映出客戶正為管道、液化天然氣 (LNG) 及電力相關需求的成長做準備。在正常的 52 週設備交期下，從預訂到產生營收的時間間隔約為 15 個月。目前拉長的交期使得轉換期大幅延長，不過設備在交付後通常會迅速投入服務。

壓縮機市場供需平衡：管理層表示，他們仍認為市場面臨壓縮設備短缺的可能性高於供過於求。高利用率與長設備交期均支持這一判斷。

技術與毛利率：Archrock 的整個機隊皆已透過遙測技術連線。公司亦在現場營運中導入自動化與人工智慧。管理層形容該推廣仍處於早期階段，預期這將有助於提高客戶設備運作時間、提升內部效率並進一步改善毛利率。

資本配置：Archrock 繼續在成長投資、股利發放、擇機買回實施庫藏股與維持強健資產負債表之間取得平衡。自 2023 年 4 月買回計畫啟動以來，公司已以 20.91 美元的平均價格購入約 460 萬股，總計耗資 9,690 萬美元。

直接需求來源：管理層表示，其壓縮業務集中於大馬力集中式集輸系統及氣舉（gas lift）。氣舉占業務比重約 35% 至 40%，用以支援原油採收。

法說會完整逐字稿

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完整財報電話會議逐字稿

管理層陳述

Operator

Good morning. Welcome to the Archrock Third Quarter 2026 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.

Megan Repine

Thank you, Jill. Hello, and we appreciate you joining us on today's call.

With me today are Brad Childers, President and Chief Executive Officer of Archrock; and Mohit Singh, Chief Financial Officer of Archrock.

Yesterday, we released our financial and operating results for the third quarter of 2026. If you have not received a copy, you can find the information on the company's website at www.archrock.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 beliefs and expectations, as well as assumptions made by and information currently available to Archrock's 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 8-K furnished to the SEC.

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

D. Childers

Thank you, Megan, and good morning, everyone.

Turning to the quarter. Our strong performance reflected the quality of our operating platform and disciplined execution. The results reinforce our confidence in the business and our ability to invest for growth while returning capital to shareholders.

Before getting into the financial highlights, I want to recognize what matters most; the safety of our employees. Safety remains our first priority, and we're proud to have recorded 0 reportable injuries in the first 3 quarters of the year. That performance reflects the focus and discipline of our employees across the organization, and I want to thank them for continuing to look out for one another and operating the right way every day.

A few highlights from the quarter. We delivered robust net income of $84.5 million, or $0.48 per share and adjusted EBITDA of $228.4 million, supported by strong contract operations fundamentals and strong operating performance across the business. Contract operations utilization remained above 94%, and contract operations adjusted gross margin reached 72%, our eighth consecutive quarter at 70% or higher.

The third quarter was our highest bookings quarter since the second quarter of 2023, with year-to-date bookings 13% above the prior year period. We generated $50 million of adjusted free cash flow and returned $41 million to shareholders through dividends. We ended the quarter with leverage of 2.5x and dividend coverage of 3.8x, underscoring our financial strength and capacity to invest in growth while returning capital to shareholders. Overall, our third quarter results reinforce our confidence in the core business and our outlook for the remainder of the year.

Geopolitical volatility continues to underscore the criticality of secure and reliable energy supplies from stable regions and the long-term strategic value of U.S. natural gas. Domestic production is reaching record levels, with 2026 volumes expected to grow approximately 2% or 2.3 Bcf per day and Permian volumes approximately 6% or 1.4 Bcf per day, both from 2025 levels as associated gas production outpaces oil growth.

At the same time, new Permian takeaway capacity is coming online. Hugh Brinson Phase 1 entered service in the third quarter and Blackcomb is currently ramping. Together, these projects add approximately 4 Bcf per day of additional capacity, with another 11 Bcf per day planned by 2030.

On the demand side, LNG remains the largest and most visible source of long-term growth. Industry forecasts point to LNG-related natural gas demand increasing from approximately 18 Bcf per day in 2026 to 34 Bcf per day by 2030 and 40 Bcf per day by 2035. Beyond LNG, growing power demand from data centers and other industrial users represents another meaningful source of potential upside.

Together, these supply and demand trends are driving the need for additional compression capacity. Our customers are preparing to serve growth across LNG, power generation and other end markets, and we're supporting them through reliable service and disciplined investment in the capacity they need. That opportunity is evident in contract operations where healthy customer demand is translating into stronger bookings, high utilization and continued requirements for compression equipment.

Bookings increased sequentially, making the third quarter our highest bookings quarter since the second quarter of 2023 and bringing year-to-date bookings 13% above the prior year period. Permian bookings were the highest in a year as rising gas-to-oil ratios and an improving production outlook continued to drive compression demand. We exited the quarter at a strong 94.3% utilization, reflecting healthy customer demand and the quality of our fleet.

Operating horsepower increased approximately 21,000 sequentially. We expect to put additional idle equipment back to work by year-end as we continue to meet customer demand. Contract operations revenue increased approximately 1.5% year-over-year to $331 million despite the sale of approximately 112,000 non-strategic operating horsepower since the prior year period.

Revenue per horsepower per month increased 4% year-over-year to $24.38. Adjusted gross margin remained excellent at 72%. Higher lube oil prices and make-ready costs associated with returning idle equipment to service created near-term cost pressure, but through disciplined cost management and our relentless pursuit of operating efficiencies, our operations team was able to offset these headwinds and sustain strong third quarter margins.

Cat engine lead times remain extended at over 180 weeks, reinforcing the importance of securing equipment to support our customers' growth. Our financial strength and market position allow us to plan for these requirements and deploy new horsepower through a disciplined returns-based investment program.

Moving to our aftermarket services segment. We continue to see customers defer major maintenance activity during the quarter. The timing of this work can be lumpy and difficult to predict and our near-term visibility remains limited. Against that backdrop, profitability was a strong point in the quarter, however, reflecting disciplined execution and our continued focus on higher quality, higher-margin work.

Turning to capital allocation. We remain disciplined and returns focused, balancing high-return growth investment, durable shareholder returns and balance sheet strength. For 2026, we are reaffirming growth capital expenditures of $250 million to $275 million to meet customer demand.

Looking further ahead, the outlook we outlined last quarter continues to support $1.4 billion to $1.6 billion of cumulative growth capital investment from 2027 through 2030 to fund the purchase of approximately 1 million horsepower, predominantly in large horsepower and electric motor drive newbuild compression.

Strong demand fundamentals and attractive returns reinforce our confidence in this investment outlook. We plan to return 25% to 35% of operating cash flow to shareholders through continued dividend growth and opportunistic share repurchases. Our quarterly dividend of $0.23 per share is approximately 10% higher year-over-year, supported by strong dividend coverage. We also retain approximately $113 million of share repurchase authorization, providing flexibility to act opportunistically when we see attractive value in our shares.

After funding these growth investments and shareholder returns, we expect to continue to generate free cash flow. Together with leverage of 2.5x, comfortably below our long-term target of 3x to 3.5x, that cash flow gives us capacity to selectively pursue inorganic opportunities that complement our core business, strengthen our platform and meet our disciplined return criteria.

In summary, bookings momentum and high utilization reflect durable demand for compression capacity. Our cash flow and balance sheet give us the flexibility to invest alongside our customers while maintaining meaningful shareholder returns. We remain focused on deploying capital at attractive returns, supporting long-term customer growth and creating sustainable value for shareholders.

With that, I'll turn the call over to Mohit to walk through our third quarter results and 2026 outlook.

Mohit Singh

Thanks, Brad, and good morning, everyone. Thank you for joining us.

Let's review our third quarter results and then discuss our current financial outlook for the balance of 2026. Third quarter net income was $84.5 million, or $0.48 per share, up from $71.2 million, or $0.40 per share in the third quarter of 2025. Excluding transaction-related costs and restructuring charges and adjusting for the associated tax impact, adjusted net income was $84.7 million, or $0.49 per share, up from $73.2 million, or $0.42 per share in the third quarter of 2025.

We delivered adjusted EBITDA of $228.4 million for the third quarter of 2026, up from $220.9 million in the third quarter of 2025. This year-over-year increase was driven by lower SG&A expense, which more than offset lower gross margin dollars in contract operations and AMS and a lower net gain on the sale of non-strategic compression and other assets.

The comparison also includes a $9.9 million sales and use tax audit benefit recorded in contract operations cost of sales in the prior year quarter that did not recur. In the third quarter, total capital expenditure was $117.9 million, including $78.4 million of growth CapEx, $33.3 million of maintenance CapEx and $6.2 million of other CapEx.

Turning to our business segments. Contract operations revenue came in at $331 million in the third quarter, up 1.5% compared to the third quarter of 2025. This year-over-year increase further reflected higher rates, partially offset by active horsepower sales to high-grade our fleet. Contract operations adjusted gross margin percentage was 72% in the third quarter compared with 73% in the year ago quarter.

The year-over-year decline primarily reflected the previously mentioned absence of the $9.9 million net benefit from certain sales and use tax audit settlements recorded in the prior year period, along with higher make-ready costs to return idle compression equipment to service and lube oil cost headwinds. Through disciplined cost management and our continued pursuit of operating efficiencies, we offset those headwinds with a lower lube oil purchase volume, parts expense, employee compensation and benefits expense.

In our aftermarket services segment, third quarter 2026 revenue was $40 million compared to $56 million in the third quarter of 2025. The decline was driven primarily by reduced customer demand for major maintenance activity as some customers continued to defer work and the timing of planned maintenance remained difficult to predict as well as lower parts sales.

Adjusted gross margin percentage was 23% in the quarter, unchanged from 23% in the year ago period, reflecting disciplined execution and our continued focus on higher quality, higher-margin work even in a challenging market.

Turning to the balance sheet. We ended the quarter in a strong financial position with long-term debt of $2.3 billion as of September 30. Our leverage ratio was 2.5x at quarter end, down from 3.1x a year ago and comfortably below our long-term target range. That improvement reflects the strength of our earnings growth and cash flow profile, giving us financial flexibility as we continue to invest in the fleet and explore strategic opportunities.

On shareholder returns, our Board recently declared a quarterly dividend of $0.23 per share, or $0.92 per share annualized, consistent with our prior quarterly dividend and up approximately 10% from the third quarter of last year. Dividend coverage remained strong at 3.8x in the third quarter, demonstrating the sustainability of our return of capital framework.

The third quarter dividend is payable November 10 to stockholders of record at the close of business on November 3. We ended September with $113.2 million of remaining capacity under our authorization, which gives us meaningful flexibility to be disciplined and opportunistic using buybacks alongside the dividend and growth investments to enhance long-term shareholder returns when market conditions are attractive.

Since the inception of the share repurchase program in April 2023, we have repurchased approximately 4.6 million shares at an average price of $20.91 per share for a total of $96.9 million. Based on our third quarter performance and expectations for the fourth quarter, we are reaffirming our full-year 2026 adjusted EBITDA guidance of $865 million to $885 million.

Strong contract operations performance and disciplined cost management support this outlook, while we continue to make -- to manage customer maintenance deferrals in AMS and near-term lube oil and make-ready cost pressures. We are also reaffirming our 2026 total capital expenditure guidance of $400 million to $445 million, including $250 million to $275 million of growth capital to meet customer demand, $125 million to $135 million of maintenance capital and $25 million to $35 million of other capital, primarily for new vehicles. We expect to fund growth investment through operating cash flow, supplemented by proceeds from non-strategic asset sales as we continue to high-grade our fleet.

With that, I'll turn the call back to Jill to begin the Q&A.

Operator

[Operator Instructions] Our first question comes from the line of Eli Jossen with JPMorgan.

分析師問答

Elias Jossen

Maybe to start on the bookings commentary, which stood as a bit of a departure from your typical demand framing, can you walk us through the conversion time line from bookings to revenue and how these are trending on pricing and margin relative to the existing contracted fleet?

D. Childers

There's a lot in that question. Let me address the bookings first and then talk about margins second. So on the bookings side, what we've seen overall in this most recent 12- to 18-month period environment has been relatively stable but flat utilization and overall somewhat flat horsepower growth.

And that has, I think, reflected a bit of some of the external factors, including export transport capacity coming out of the Permian, pent-up activity from some of the customers. And what we're seeing with pipelines coming online, LNG projects coming online is our customers starting to ramp up to address what is going to be a period of, we expect, future growth. So that's, I think, some of what we're seeing in the business. It's reflected in our bookings activity, and that's what we wanted to share.

On margin, you can still see a strong pricing environment, close to record revenue per horsepower, dollars per horsepower on the revenue side per month and really strong overall margins and profitability in the business. So it's just a really solid environment to see both growth and of a really good margin, high-return business.

Elias Jossen

Got it. That's helpful. And then, obviously, some tailwinds in SG&A this quarter. Just want to get a sense of where we kind of bridge from 3Q to 4Q within the guide and think about what SG&A might look like sequentially? And then broader, any kind of key items we should think about going into year-end?

Mohit Singh

Yes. Thanks, Eli. This is Mohit. I'll take that. So when you look at SG&A, that decline was primarily related to the stock price-driven changes in the long-term incentive program expense. So, there was a large sequential swing as we went from Q2 to Q3, with the Q3 LTI reflecting a credit rather than an expense as opposed to what happened in Q2. So, absent a significant move in the stock price in Q4, we expect SG&A to increase sequentially and get back to more normal long-term incentive compensation expense range. So the last takeaway I'll leave you with is just Q3 SG&A should not be taken as the ongoing run rate because there were some one-off things that happened there.

Operator

The next question comes from Jim Rollyson with Raymond James.

James Rollyson

Great job on the margin front, especially given the cost headwinds you have. Brad, given all the noise kind of going on around data centers going into elections today and obviously, the recent retreat in your share price, maybe coupled with the capital program you unveiled a quarter ago, just from a high level, as you look out through 2030 and beyond, anything in your mind changed in any material way in the past 90 days?

D. Childers

In short, no. I do think -- we can't address the macro market or all the drivers of the macro market. But as we are engaged as a country in what is going to be just an amazingly large infrastructure build-out, volatility ahead, we should expect. There's going to be more volatility as we are figuring out this investment cycle, working through this investment cycle. And we are on the strong power driving end of the whip a bit when we think about these macro factors. But none of the fundamentals have changed.

The largest uptake for natural gas remains LNG. I outlined those -- that growth profile in my prepared remarks, so I won't repeat it here. And very secondarily, the amount of gas that's going to be required to power data centers is less than 1/3 of that LNG equivalent. So, what we see is strong demand ahead for power, strong demand ahead for natural gas and really strong demand ahead for natural gas compression. If I were to take the over-under, I still believe the market is more likely to be short of compression equipment than long on compression equipment.

James Rollyson

Appreciate that. And as a follow-up, AMS, I think last quarter, you made a mention as it was kind of underwhelming with deferred maintenance that it's a pay me now or pay me later type of business. And obviously, not a material change sequentially as you kind of head into 4Q and maybe 1Q where seasonally, you normally are a little bit softer. Just curious if conversations or if you guys have done any analysis to kind of figure out how long can they kind of defer things until they actually have to come back and pay you later?

D. Childers

Jim, it's a really fair question and really hard. I'll just admit very hard to answer. There's not really analysis that we can do on the customers' equipment to figure that out. But what I'll give you the analogy for is that like refineries and other businesses where pricing can make an impact as to how different operators think about their business, it's a time when the run-to-failure mode in the compression space by some of our customers is preferable so they can maximize their current near-term revenue, knowing that the future oil price is -- especially if we have a cessation of hostilities in the Middle East is likely to return to a lower level. And because of that, they're maximizing now and deferring maintenance. So we don't -- I don't really have a clock or a calendar that is going to give us that insight. But it is what we have experienced historically, and we expect to see that come back again.

Mohit Singh

And Jim, maybe let me build on what Brad said is, I mean, the focus for us just remains on disciplined execution and profitability rather than just chasing volumes. And as you see from the numbers, profitability remains solid and we are well positioned to capture the maintenance activity as and when it returns.

Operator

The next question comes from the line of Doug Irwin with Citi.

Douglas Irwin

Maybe another one on margins, just on the OpEx side. Could you just talk a bit more about where you were able to offset some of the higher costs that you've talked about, maybe how durable some of those efforts might be and what that can mean for your gross margin trajectory kind of into 2027 and beyond?

D. Childers

Yes, we can share. We can share some. Number one, on the lube oil side, we were able to moderate and we're working very aggressively to moderate lube oil volumes in the face of these cost pressures. That's one opportunity. Another opportunity that we've exercised is, as you've seen the decline in the AMS business, we've been able to repurpose some of our internal labor to work in our contract operations segment, and that displaces some higher cost external labor that we were bringing in.

Those are 2 of the more substantial opportunities that we've taken advantage of. And I'm just going to say to the operating team listening right now, they just did a great job of responding to the pressures in this environment. It's really just an example of great execution across the board, maximizing every opportunity to offset that lube oil cost headwind that we encountered.

Douglas Irwin

Got it. That's helpful. And maybe a follow-up on horsepower additions. Could you maybe just give an update on where you're trending relative to that 170,000 horsepower target that you talked about back when you gave initial guidance? Feels like maybe fourth quarter is trending to be a pretty strong quarter here in that regard. So, just curious kind of how you're thinking about fleet additions in the context of your annual guide and what might be some pretty strong momentum into next year here?

D. Childers

Doug, you're right. We do expect that the fourth quarter is going to be a strong quarter for deliveries. We've taken delivery of about 125,000 horsepower year-to-date, leaving approximately 50,000 that we'll take delivery of in Q4. Now, we'll start as much as that as this contract start in the quarter, but some of that obviously is going to impact Q1 in addition to Q4. But we are expecting a strong Q4 for equipment deliveries.

Operator

The next question comes from the line of Nate Pendleton with Texas Capital.

Nathaniel Pendleton

Congrats on the quarter. Perhaps for Mohit, can you provide an update on how your team is looking at capital allocation here, given the dividend repurchase authorization and growth outlook, acknowledging that you didn't lean into the repurchase this quarter?

Mohit Singh

Yes. Thanks, Nate. You're right. When we think of capital allocation, it's essentially balancing 3 things. One is looking at growth investments that we can reinvest back into acquiring more horsepower, generating more free cash flow and then balancing it in a prudent way with shareholder returns. In our prepared remarks, you heard the Board authorized $0.23 per share quarterly dividend, which annualizes to $0.92 per share for the full year.

Overall, our strategy is to return 25% to 35% of operating cash flow back to the shareholders through a combination of repeatable dividends, but also complemented by opportunistic buybacks. With buybacks, as you very well will appreciate, it's about trying to buy back stocks when the market conditions are favorable, and then we are also in an open window. It just did not happen in Q3.

And as a result, we did not do much buybacks. But if you look at our overall track record since the inception of the program, we have bought about 4.6 million shares at $20.91 per share. We remain overall very committed to shareholder returns. And as and when the conditions are right, you'll see us stand and be ready to buy back when the stock represents an attractive buyback opportunity.

Nathaniel Pendleton

Great. And perhaps as my follow-up, I wanted to circle back to the bookings. Can you talk about if those bookings were primarily with existing customers? Or are there any noteworthy wins within those deals?

D. Childers

Given the breadth of our customer base, it's almost always going to be the case that they are primarily with existing customers. And so without going down the list of customers live, I believe that, that's still going to be the right assumption that it's predominantly with our existing customer base.

Operator

The next question comes from the line of Steve Ferazani with Sidoti.

Michael Mathison

This is Michael Mathison sitting in for Steve. I want to come back to the question of bookings. Do you see demand growth growing outside the Permian? Or is all the growth still concentrated in the Permian? Do you see growth in other basins is, I guess, what I'm asking?

D. Childers

We do see growth outside the Permian. I mean, the Permian is going to remain the attractor of CapEx for the industry for a while. It's just -- it's a monster basin in size, and it's the most cost-effective basin from a production perspective on cost. But fortunately, we saw more growth outside the Permian than we saw in the Permian, including the Rockies, which was our largest growth area in the quarter. But we also saw incremental growth in the Haynesville and in the Mid-Continent area. So right now, the Permian accounted for between 30% to 40% of the growth we saw in the quarter, more growth outside the Permian in this period.

Michael Mathison

Excellent. That's very helpful. Just a follow-up question on bookings. Your bookings are up 13% year-to-date, and you're effectively running at maximum utilization. Do you see customers starting to book further into the future as a result to sort of guarantee access to equipment?

D. Childers

Yes and no. We see a mix of customers that are very driven to secure equipment well in advance, and it's balanced by other customers that don't. So it's -- I can't generalize across the board to say that all the customers are actually behaving that way, but we do see a mix of some that are very good planners and others that are candidly less planful and depending upon us to be there for them when they place their orders.

Operator

The next question comes from the line of Elvira Scotto with RBC Capital Markets.

Elvira Scotto

You highlighted that one of the cost headwinds was make-ready costs as you kind of bring idle capacity kind of back online. Where are you in that process? And where can we see those cost headwinds subside?

D. Childers

At 94% utilization, those costs are -- they spike up a bit this year because we have to have a period of time where we're putting more of our existing fleet back to work than the newbuild. But they will moderate a bit in the future. I'm going to say, however, that among the dollars I like investing the most is dollars to put that equipment back to work. It just shows the strength of this business continues to improve our overall return on invested capital and returns to our investors.

Mohit Singh

The one thing I'll add to what Brad said, Elvira, is I mean, if you look at our overall operating expense per horsepower trend on a quarterly basis, it trended down. So, despite having higher lube oil headwinds and higher make-ready expense through prudent management of exposure and through efficient efforts on net labor expenditure, overall, when you roll it up, we were able to trend it down. So, a lot of credit goes to our teams for working towards that very prudently.

Elvira Scotto

That's helpful. And then my next question is, I mean, I know you talked about margins and what's driving margins. But I'm curious, you've made investments in technology initiatives. You talk about telemetry, potentially AI. How much of that is playing into margin improvement? And where are we sort of in that process there in terms of like -- I don't know if you want to talk in like what inning are we in, in realizing benefits from these initiatives that you've undertaken over the years?

D. Childers

Great question and a fun question to be able to address, Elvira. Thank you. When we look at the overall gross margin and the improvement you've seen consistently on a year-over-year basis now for several years, it reflects a few dynamics, one of which you cited and I'm going to come back to. Fundamentally, it reflects the transformation of our fleet to focus on large horsepower and electric motor drive, 2 significant drivers in our overall profitability. But the technology investments we've made are absolutely a part of this continuous improvement that we're seeing in our operations, in our customer service and in our gross margin performance.

We do expect to continue to invest in technology. We have deployed both automation. We've deployed telemetry. We're deploying artificial intelligence in various components of our field organization today. And I'd say that we are probably still in the very early innings of that deployment, which is going to be really beneficial for our customers and for the service quality we offer. And I think it's going to continue to put us in the position of driving improvement in gross margin. And it should have 2 impacts.

One, the more service we can offer our customers, the more we can help them maintain their production and total downtime, I believe the larger revenue share we can earn. And then secondly, it drives great efficiencies for us internally. So for both of those reasons, I remain optimistic as I have been now for years that we can continue to drive improving profitability in this business as we improve the overall uptime and throughput and gas compression activities for our customers.

Operator

The next question comes from the line of Joshua Jayne with Daniel Energy Partners.

Joshua Jayne

First one is just on the Caterpillar lead times. You cited 180 weeks, and it sounds like it's getting better, not worse. Maybe if you could just discuss how things are unfolding and maybe how your scale and relationship might be helping with that and just what you're seeing and hearing from them would be helpful to start.

D. Childers

Lead times have come down. Caterpillar has communicated that -- number one, I never speak for Caterpillar, but I'll say they've invested in improving their throughput and addressing this high demand market. And candidly, they're addressing it really well. We've been in the position to be able to obtain equipment that we need, though we have ordered equipment in advance.

Lead times are out there, but Caterpillar is making deliveries and we're receiving them. We do think that the high-demand market that we're in, I think lead times are going to remain extended. But if you place orders and plan your business prudently, you can get equipment, and that's the position that we are in.

Joshua Jayne

And my second one. You unpacked a little bit on -- in answering your last question, but I just wanted to follow up on the commentary about investing in automation, AI, et cetera. Could you maybe discuss what percentage of the fleet do you think is upgradable to some of those components? And just how you're thinking about that over the next couple of years and how the response is and like the economics that make sense for the customers would be just helpful to go into a little bit more detail, and then I'll turn it back.

D. Childers

Starting off with the fleet, 100% of our fleet is connected with telemetry that brings us lots of data on a daily basis that comes in, in a more centralized system into a large data engine that allows us to sort through, see the activity, prioritize the activity and respond to the activity. So it's -- the entire fleet is connected, communicating and giving us good data and better information around which to assess, diagnose, troubleshoot and respond to our customers.

Similarly, we have good automation around how we manage our parts business to part up both our locations and our techs before they hit location. And then we also have good communication technology for our mechanics to access the information regarding that unit. And so all of that is working together. It's not just about kind of what the individual units can do. It's what the overall process and systems that we've invested in can accomplish and do. So it's a high percentage.

What we're seeing, however, is just the opportunity to continue to implement and get coordination in the field with that data so that we are constantly smarter because the unit is making it smarter and the mechanic has access to the information parts that the mechanic needs to respond more timely and more fully to address customer downtime. So it's not just the units, it's the entire system, and it's working actually really well.

Operator

Our last question comes from the line of Nick Amicucci with Evercore.

Nicholas Amicucci

Just wanted to kind of touch upon if we could to -- just if we could distinguish kind of the direct awards from the broader market. So, you guys have kind of cited LNG exports and power generation as the long-term natural gas demand drivers. Just kind of thinking through like where are those awards kind of going to be identifiable for you guys? Like is it going to be gathering, processing, transmission on that side of the house, if you could just kind of parse that out?

D. Childers

Nick, I want to make sure I understand the question. You're wanting to get a take on what part of the demand impacts us directly? Is it gathering? Is it gas lift? Is it transportation on larger pipelines? Am I understanding your question?

Nicholas Amicucci

Yes.

D. Childers

Okay. So yes, look, our business really comes into 2 primary segments. One is gathering in the oilfield with centralized gathering systems that's dominated by large horsepower of the equipment that we're primarily investing in, and that includes both gas drive as well as electric motor drive.

And then the second part of our business, like 35% to -- between 35% and 40% of our business is directly on gas lift to assist with oil production. So, those are the 2 segments where we see the awards very directly and the activity with our customers very directly that are going to continue to support growth in our business.

Nicholas Amicucci

Perfect. That makes sense. And then if I could, just like given you guys are somewhat more of the picks-and-shovels type of play here, just as we think about kind of the bookings and the strong bookings within this quarter, just -- if we wanted to kind of get the -- get an idea of just kind of the visibility into 2027 and just kind of how those bookings then translate into revenue and kind of the margin accretion behind it. So, basically just the timing from bookings to revenue.

D. Childers

Well, we haven't guided 2027. We're not yet guiding 2027. We will do that in our fourth quarter call. But when you look ahead at the year and the CapEx spend that we've projected, the primary variables you'll want to think about are going to be our utilization and then the incremental horsepower that gets added because of the investment in newbuild horsepower. And both of those are going to indicate, I think, the opportunity for us to grow and to have a very strong delivery of horsepower growth in 2027.

As far as the timing of the cycle, typically between booking -- I'm sorry, let me back up and say that right now, it's almost impossible to gauge because of the extended lead times that we have for equipment. Normally speaking, if we had a 52-week lead time, the timing from booking to revenue would be something like instead of 1 year, it would be a year and a quarter. As soon as we receive equipment, it usually goes to work very promptly. It's a very capital-efficient business in that regard. But with lead times out through 2029, the time frame for bookings -- that booking cycle to first revenue is way extended.

Operator

There are no more questions. And so now I'd like to turn the call back over to Mr. Childers for final remarks.

D. Childers

Thank you for joining us today, everyone, and for your continued interest in Archrock. We look forward to updating you following our next quarter's results.

Thanks, everyone.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.