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Segments | 12 Months Ended
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Dec. 31, 2024
Segment Information |
Segments | 30. Segments We manage our business segments primarily based on the type of product or service provided. We operate two segments within the U.S.: contract operations and aftermarket services. The contract operations segment provides natural gas compression services to meet specific customer requirements. The aftermarket services segment provides a full range of services to support the compression needs of customers, from parts sales and normal maintenance services to full operation of a customer’s owned assets. The CODM of Archrock is our President & CEO. Our CODM evaluates the performance of our segments and allocates resources primarily based on adjusted gross margin, defined as revenue less cost of sales, exclusive of depreciation and amortization, which are key components of segment operations. Adjusted gross margin is the primary measure used by our CODM to evaluate segment performance because it focuses on the current performance of segment operations and excludes the impact of the prior historical costs of assets acquired or constructed that are utilized in those operations, the indirect costs associated with our SG&A activities, our financing methods and income taxes. Our CODM considers adjusted gross margin forecast to actual results and period over period financial variances in conjunction with product and customer service metrics and market trends when assessing segment performance and deciding how to allocate resources. As an indicator of our operating performance, adjusted gross margin should not be considered an alternative to, or more meaningful than, gross margin, net income (loss) or any other measure presented in accordance with GAAP. Our adjusted gross margin may not be comparable to a similarly titled measure of other entities because other entities may not calculate adjusted gross margin in the same manner. Summarized financial information for our reporting segments is shown below:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Contract |  | Aftermarket |  | ​ | ​
(in thousands) |  | Operations |  | Services |  | Total
2024 |  | ​ |  |  | ​ |  |  | ​ |
Revenue(1) | ​ | $ | 980,405 | ​ | $ | 177,186 | ​ | $ | 1,157,591
Cost of sales, exclusive of depreciation and amortization | ​ | ​ | 323,052 | ​ | ​ | 135,449 | ​ | ​ | 458,501
Adjusted gross margin | ​ |  | 657,353 | ​ |  | 41,737 | ​ |  | 699,090
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2023 | ​ |  |  | ​ |  |  | ​ |  |
Revenue(1) | ​ | $ | 809,439 | ​ | $ | 180,898 | ​ | $ | 990,337
Cost of sales, exclusive of depreciation and amortization | ​ | ​ | 306,748 | ​ | ​ | 142,271 | ​ | ​ | 449,019
Adjusted gross margin | ​ |  | 502,691 | ​ |  | 38,627 | ​ |  | 541,318
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2022 | ​ |  |  | ​ |  |  | ​ |  |
Revenue(1) | ​ | $ | 677,801 | ​ | $ | 167,767 | ​ | $ | 845,568
Cost of sales, exclusive of depreciation and amortization | ​ | ​ | 278,898 | ​ | ​ | 140,586 | ​ | ​ | 419,484
Adjusted gross margin | ​ |  | 398,903 | ​ |  | 27,181 | ​ |  | 426,084
(1) Segment revenue includes only sales to external customers. ​ The following table reconciles adjusted gross margin to gross margin, its most directly comparable to GAAP measure:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended December 31,
(in thousands) | ​ | 2024 |  | 2023 |  | 2022
Total revenues | ​ | $ | 1,157,591 | ​ | $ | 990,337 | ​ | $ | 845,568
Cost of sales, exclusive of depreciation and amortization | ​ |  | (458,501) | ​ |  | (449,019) | ​ |  | (419,484)
Depreciation and amortization | ​ |  | (193,194) | ​ |  | (166,241) | ​ |  | (164,259)
Gross margin | ​ |  | 505,896 | ​ |  | 375,077 | ​ |  | 261,825
Depreciation and amortization | ​ | ​ | 193,194 | ​ | ​ | 166,241 | ​ | ​ | 164,259
Adjusted gross margin | ​ | $ | 699,090 | ​ | $ | 541,318 | ​ | $ | 426,084
​ The following table reconciles total adjusted gross margin to income before income taxes:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended December 31,
(in thousands) | ​ | 2024 |  | 2023 |  | 2022
Total adjusted gross margin | ​ | $ | 699,090 | ​ | $ | 541,318 | ​ | $ | 426,084
Less: | ​ |  |  | ​ |  |  | ​ |  |
Selling, general and administrative | ​ |  | 139,121 | ​ |  | 116,639 | ​ |  | 117,184
Depreciation and amortization | ​ |  | 193,194 | ​ |  | 166,241 | ​ |  | 164,259
Long-lived and other asset impairment | ​ |  | 10,681 | ​ |  | 12,041 | ​ |  | 21,442
Restructuring charges | ​ | ​ | — | ​ | ​ | 1,775 | ​ | ​ | —
Debt extinguishment loss | ​ | ​ | 3,181 | ​ | ​ | — | ​ | ​ | —
Interest expense | ​ |  | 123,610 | ​ |  | 111,488 | ​ |  | 101,259
Transaction-related costs | ​ | ​ | 13,249 | ​ | ​ | — | ​ | ​ | —
Gain on sale of assets, net | ​ | ​ | (17,887) | ​ | ​ | (10,199) | ​ | ​ | (40,494)
Other expenses, net | ​ |  | 1,561 | ​ |  | 1,086 | ​ |  | 1,845
Income before income taxes | ​ | $ | 232,380 | ​ | $ | 142,247 | ​ | $ | 60,589
​ The following table reconciles capital expenditures by segment to total capital expenditures: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended December 31,
(in thousands) | ​ | 2024 |  | 2023 |  | 2022
Contract Operations | ​ | $ | 353,785 | ​ | $ | 294,315 | ​ | $ | 237,246
Aftermarket services | ​ |  | 3,277 | ​ |  | 3,300 | ​ |  | 1,964
Segment capital expenditures | ​ |  | 357,062 | ​ |  | 297,615 | ​ |  | 239,210
Other (1) | ​ |  | 1,970 | ​ |  | 1,017 | ​ |  | 657
Total capital expenditures | ​ | $ | 359,032 | ​ | $ | 298,632 | ​ | $ | 239,867
(1) Corporate–related items. ​ The following table reconciles total assets by segment to total assets per the consolidated balance sheets: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | December 31,
(in thousands) |  | 2024 | ​ | 2023
Contract operations assets | ​ | $ | 3,677,056 | ​ | $ | 2,518,282
Aftermarket services assets | ​ |  | 57,642 | ​ |  | 57,459
Segment assets | ​ | ​ | 3,734,698 | ​ | ​ | 2,575,741
Other assets (1) | ​ | ​ | 81,639 | ​ | ​ | 72,341
Assets of discontinued operations | ​ | ​ | 7,868 | ​ | ​ | 7,868
Total assets | ​ | $ | 3,824,205 | ​ | $ | 2,655,950
(1) Corporate–related items.

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- Definition The entire disclosure for reporting segments including data and tables. 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