Natural Gas Services Group, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue for the three months ended September 30, 2026, increased 41.1% to $61.3 million from $43.4 million in the same period in 2025.
• Rental revenue increased 41.9% to $58.9 million from $41.5 million in the third quarter of 2025.
• Net income was $5.6 million ($0.43 per diluted share) for the third quarter of 2026, compared to $5.8 million ($0.46 per diluted share) in the third quarter of 2025 and $3.8 million ($0.30 per diluted share) in the second quarter of 2026.
• Adjusted Net Income was $6.2 million ($0.48 per diluted share) for the third quarter of 2026, compared to $5.8 million ($0.46 per diluted share) in the third quarter of 2025.
• Adjusted EBITDA was $29.6 million for the third quarter of 2026, representing a 42.2% year-over-year increase from $20.8 million and an 18.2% sequential increase from $25.1 million in the second quarter of 2026.
• Total gross margins increased to $23.3 million from $16.7 million in the third quarter of 2025.
• Total Adjusted Gross Margin increased to $36.9 million from $25.8 million in the third quarter of 2025.
• Operating income was $13.7 million for the third quarter of 2026, compared to $10.8 million in the comparable 2025 period.
• Cash flows provided by operating activities were $16.7 million for the three months ended September 30, 2026, compared to $16.8 million in the same period in 2025.
• Cash flows used in investing activities were $25.9 million for the three months ended September 30, 2026, consisting entirely of capital expenditures ($20.6 million growth, $5.3 million maintenance), compared to $41.9 million in the same period in 2025.
• Outstanding debt on the revolving credit facility was $340.0 million as of September 30, 2026, with $139.8 million of availability.
• The leverage ratio was 2.80x and the fixed charge coverage ratio was 3.84x as of September 30, 2026.

Guidance and Future Outlook:

• Updated full-year 2026 Adjusted EBITDA guidance to $105 million to $108 million, raising the midpoint from the prior guidance of $103 million to $108 million.
• Updated 2026 growth capital expenditure guidance to $60 million to $75 million, narrowing the range from previous estimates.
• Maintenance capital expenditure guidance remains unchanged at $15 million to $19 million for 2026.
• The updated guidance reflects strong operating performance, continued success integrating Flatrock, high utilization, and organic fleet expansion, balanced with expected inflationary pressures.

Business Segments and Product Lines:

• Rental adjusted gross margin remained strong at 62.2% for the third quarter of 2026.
• The company added more than 20,000 horsepower organically during the third quarter, bringing year-to-date additions to approximately 43,000 horsepower.
• Utilized horsepower increased 30.0% to 683,952 as of September 30, 2026, from 526,015 in the same period in 2025.
• Horsepower utilization remained strong at 88% for the third quarter of 2026.
• Sales revenue was $911,000 for the third quarter of 2026, compared to $471,000 in the third quarter of 2025.
• Aftermarket services revenue was $1.459 million for the third quarter of 2026, compared to $1.428 million in the third quarter of 2025.

Market and Competitive Landscape:

• The integration of the Flatrock acquisition continues to advance, accelerating strategic initiatives to improve operating efficiency and leverage the combined organization's capabilities.
• The company focuses on monetizing non-core assets to invest capital in higher-return opportunities.

Risks and Challenges:

• Forward-looking statements note risks including inflationary pressures, volatility in oil and gas prices, and changes in general economic conditions.
• Risks include the failure of projected organic growth due to depressed oil and gas prices, oppressive environmental regulations, and competition.
• Potential challenges include the integration of the Flatrock Acquisition, inability to achieve increased asset utilization, and failure of customers to continue renting equipment after primary rental terms expire.
• Other risks include fluctuations in interest rates, inability to comply with debt covenants, cybersecurity threats, and capacity availability or costs of outsourced compressor fabrication providers.

Management Commentary and Tone:

• CEO Justin Jacobs described the quarter as a "record quarter," marking the first full quarter of financial contribution from Flatrock.
• Management highlighted that results reflect the dedication of field service technicians focusing on reliability, uptime, and customer service.
• Management expressed confidence in the cash-generating capacity of the business, citing strong operating performance as the basis for increasing the quarterly dividend.

Other Key Points:

• The Board of Directors declared a quarterly cash dividend of $0.16 per share, payable on December 2, 2026, representing a 6.7% increase from the third-quarter dividend of $0.15 per share.
• The company returned $5.2 million to shareholders through dividends year-to-date.
• The company entered into an agreement to sell its Tulsa fabrication facility for $4.75 million; the sale is expected to be completed by the end of November 2026.
• A $6.0 million share repurchase program is in place, expiring in August 2027; no shares were repurchased during the third quarter of 2026.
• The company has a $500 million credit facility and significant borrowing capacity to fund organic growth and pursue accretive acquisitions.
• Goodwill of $825,000 and intangible assets of $1,082,000 were recorded on the balance sheet as of September 30, 2026, reflecting the Flatrock acquisition.
• Strategic transaction costs and integration expenses related to the Flatrock Acquisition were $0.8 million for the third quarter of 2026.