Fourth Quarter 2025 and Full Year 2025 Highlights
Rental revenue of $44.3 million for the fourth quarter of 2025 represents a 16.0% year-over-year increase and a 6.8% sequential increase compared to the third quarter of 2025. Rental revenue for the full year 2025 of $164.3 million represents a 13.9% increase compared to 2024.
Net income of $4.1 million, or $0.32 per diluted share, for the fourth quarter of 2025 compared to $2.9 million or $0.23 per diluted share for the fourth quarter of 2024. Net income for the full year 2025 of $19.9 million, or $1.57 per diluted share, compared to $17.2 million, or $1.37 per diluted share, in 2024.
Adjusted EBITDA of $21.2 million for the fourth quarter of 2025, represents a 17.6% year-over-year increase and a 1.6% increase sequentially. Adjusted EBITDA for the full year 2025 of $81.0 million represents a 16.5% increase compared to 2024.
Management Commentary and Outlook "NGS delivered another strong quarter and capped off a record year in 2025," said Justin Jacobs, Chief Executive Officer. "We achieved record rented horsepower and utilization while continuing to expand our fleet and improve pricing across our compression portfolio. These results reflect the strength of our technology, disciplined execution in the field, and sustained demand for large horsepower compression."
"During the fourth quarter, rented horsepower increased by 37,000 horsepower to 563,000, representing a 14.4% increase year-over-year, while fleet utilization reached 84.9%, another historical record for NGS. Fourth quarter rental revenue increased to $44.3 million, up 16.0% year-over-year and another high-water mark for the Company. For the quarter, we generated Adjusted EBITDA of $21.2 million, bringing full year 2025 Adjusted EBITDA to $81.0 million, both record levels for the Company and at the high end of our guidance."
"2025 also marked an important milestone in our capital allocation strategy as we initiated our inaugural dividend during the third quarter and increased it by 10.0% with our fourth quarter issuance. In total the Company returned $2.6 million to shareholders in the second half of 2025 underscoring confidence in cash generation and a disciplined capital allocation strategy."
"Looking ahead, the strong year-over-year performance the Company delivered in 2025 reflects the structural growth taking place in our business driven by fleet expansion, improved utilization, and strong customer demand. We expect this trend to continue in 2026. Our growth investments remain focused on large horsepower and electric motor drive assets which will expand our Adjusted Rental Gross Margin in 2026."
"NGS remains committed to a balanced capital allocation framework, prioritizing organic fleet growth while returning capital to shareholders and continuing to evaluate accretive M&A opportunities. With low leverage, our balance sheet provides significant flexibility to continue investment while delivering sustainable value to our shareholders."
Corporate Guidance, 2026 OutlookBased on the continued strength of our business, contracted large horsepower deployments, and confidence in our strategic growth initiatives, the Company is introducing the following guidance for the full year 2026:
Outlook
FY 2026 Adjusted EBITDA
$90.5 million - $95.5 million
FY 2026 Growth Capital Expenditures
$55.0 million - $70.0 million
FY 2026 Maintenance Capital Expenditures
$15.0 million - $18.0 million
The company expects 2026 Adjusted EBITDA of $90.5 million to $95.5 million, with the meaningful increase compared to 2025 driven primarily by the full-year contribution from large horsepower units deployed during the second half of 2025, new large horsepower unit deployments in 2026, and operationally driven Adjusted Rental Gross Margin expansion. These expectations build upon the Company's record operational performance and increasing utilized horsepower levels achieved in 2025.
Growth capital expenditures for 2026 are expected to range from $55 million to $70 million, reflecting continued investment in large horsepower compression units supported by multi-year customer contracts. The Company has increased the low end of the range from $50 million, following 2025 growth capital expenditures at the high end of the guidance range reflecting the strong demand environment for compression services. Maintenance capital expenditures for 2026 are expected to range from $15 million to $18 million.
Consistent with prior periods, the Company remains committed to disciplined capital allocation and investing in assets that generate attractive long-term returns for shareholders. Over the past several years, the Company has demonstrated a consistent track record of deploying capital efficiently while expanding the fleet, increasing utilized horsepower, and strengthening the Company's financial position, and expects to maintain that disciplined approach going forward.
2025 Fourth Quarter Financial ResultsRevenue: Total revenue for the three months ended December 31, 2025, increased 13.5% to $46.1 million from $40.7 million for the three months ended December 31, 2024. This increase was solely attributable to higher rental revenues for the comparable periods. Rental revenue increased 16.0% to $44.3 million from $41.5 million in the third quarter of 2025 driven by contracted fleet expansion and continued pricing strength across the company's fleet. As of December 31, 2025, we had 562,676 rented horsepower (1,245 utilized units) compared to 491,756 horsepower (1,208 utilized units) as of December 31, 2024, reflecting a 14.4% increase in total utilized horsepower.
Gross Margins and Adjusted Gross Margins: Total gross margins, including depreciation expense increased to $16.5 million for the three months ended December 31, 2025, compared to $14.6 million for the same period in 2024. Total adjusted gross margin, exclusive of depreciation expense, increased to $26.2 million for the three months ended December 31, 2025, compared to $23.0 million for the same period in 2024. For a reconciliation of Gross Margin, see Non-GAAP Financial Measures, Adjusted Gross Margin, below.
Operating Income: Operating income for the three months ended December 31, 2025, was $7.1 million compared to operating income of $6.0 million for the comparable 2024 period.
Net Income: Net income for the three months ended December 31, 2025, was $4.1 million, or $0.32 per diluted share, compared to net income of $2.9 million, or $0.23 per diluted share, for the comparable 2024 period. The year-over-year and sequential increases in net income were driven by the increases in rental revenue and the associated gross margin impact, partially offset by higher selling, general and administrative expenses and rental equipment depreciation.
Cash Flows: For the three months ended December 31, 2025, cash flows provided by operating activities were $13.9 million, while cash flows used in investing activities was $34.5 million. This compares to cash flows from operating activities of $9.4 million and cash flows used in investing activities of $14.8 million for the comparable three-month period in 2024.
Adjusted EBITDA: Adjusted EBITDA increased 17.6% to $21.2 million for the three months ended December 31, 2025, from $18.0 million for the same period in 2024. The increase was primarily attributable to higher rental revenue and rental adjusted gross margin. Sequentially, Adjusted EBITDA increased 1.6% when compared to $20.8 million for the three months ended September 30, 2025.
Debt: Outstanding debt on our revolving credit facility as of December 31, 2025, was $230.0 million. Our leverage ratio as of December 31, 2025, was 2.72x and our fixed charge coverage ratio was 3.45x. The Company is in compliance with all terms, conditions and covenants of the credit agreement.
Selected data: The tables below show revenue by product line, gross margin and adjusted gross margin for the trailing five quarters. Adjusted gross margin is the difference between revenue and cost of sales, exclusive of depreciation.
Revenues
Three months ended
December 31,2024
March 31,2025
June 30,2025
September 30,2025
December 31,2025
(in thousands)
Rental
$
38,226
$
38,910
$
39,580
$
41,502
$
44,334
Sales
997
1,927
750
471
844
Aftermarket services
1,435
546
1,052
1,428
971
Total
$
40,658
$
41,383
$
41,382
$
43,401
$
46,149
Gross Margin
Three months ended
December 31,2024
March 31,2025
June 30,2025
September 30,2025
December 31,2025
(in thousands)
Rental
$
14,865
$
15,634
$
15,294
$
16,508
$
16,346
Sales
(531
)
(181
)
(254
)
(75
)
(134
)
Aftermarket services
296
264
310
244
283
Total
$
14,630
$
15,717
$
15,350
$
16,677
$
16,495
Adjusted Gross Margin (1)
Three months ended
December 31,2024
March 31,2025
June 30,2025
September 30,2025
December 31,2025
(in thousands)
Rental
$
23,107
$
24,070
$
24,052
$
25,532
$
25,940
Sales
(449
)
(89
)
(161
)
23
(14
)
Aftermarket services
321
275
332
273
304
Total
$
22,979
$
24,256
$
24,223
$
25,828
$
26,230
Adjusted Gross Margin %
Three months ended
December 31,2024
March 31,2025
June 30,2025
September 30,2025
December 31,2025
Rental
60.4
%
61.9
%
60.8
%
61.5
%
58.5
%
Sales
(45.0
)%
(4.6
)%
(21.5
)%
4.9
%
(1.7
)%
Aftermarket services
22.4
%
50.4
%
31.6
%
19.1
%
31.3
%
Total
56.5
%
58.6
%
58.5
%
59.5
%
56.8
%
Operating Statistics (at end of period):
Three months ended
December 31,2024
March 31,2025
June 30,2025
September 30,2025
December 31,2025
Horsepower Utilized
491,756
492,679
498,651
526,015
562,676
Total Horsepower
598,840
603,391
596,322
625,686
662,542
Horsepower Utilization
82.1
%
81.7
%
83.6
%
84.1
%
84.9
%
Units Utilized
1,208
1,202
1,198
1,235
1,245
Total Units
1,912
1,916
1,833
1,891
1,914
Unit Utilization
63.2
%
62.7
%
65.4
%
65.3
%
65.0
%
(1) For a reconciliation of adjusted gross margin to its most directly comparable financial measure calculated and presented in accordance with GAAP, please read "Non-GAAP Financial Measures - Adjusted Gross Margin" below.
Non-GAAP Financial Measure - Adjusted Gross Margin: "Adjusted Gross Margin" is defined as total revenue less costs of revenues (excluding depreciation and amortization expense). Adjusted Gross Margin is included as a supplemental disclosure because it is a primary measure used by our management as it represents the results of revenue and costs (excluding depreciation and amortization expense), which are key components of our operations. Adjusted Gross Margin differs from gross margin, in that gross margin includes depreciation and amortization expense. We believe Adjusted Gross Margin is important because it focuses on the current operating performance of our operations and excludes the impact of the prior historical costs of the assets acquired or constructed that are utilized in those operations. Depreciation and amortization expense does not accurately reflect the costs required to maintain and replenish the operational usage of our assets and therefore may not portray the costs from current operating activity. Rather, depreciation and amortization expense reflects the systematic allocation of historical property and equipment costs over their estimated useful lives.
Adjusted Gross Margin has certain material limitations associated with its use as compared to gross margin. These limitations are primarily due to the exclusion of depreciation and amortization expense, which is material to our results of operations. Because we use capital assets, depreciation and amortization expense is a necessary element of our costs and our ability to generate revenue. In order to compensate for these limitations, management uses this non-GAAP measure as a supplemental measure to other GAAP results to provide a more complete understanding of our performance. As an indicator of our operating performance, Adjusted Gross Margin should not be considered an alternative to, or more meaningful than, gross margin as determined in accordance with GAAP. Our Adjusted Gross Margin may not be comparable to a similarly titled measure of another company because other entities may not calculate Adjusted Gross Margin in the same manner.
The following table calculates our gross margin, the most directly comparable GAAP financial measure, and reconciles it to Adjusted Gross Margin:
Three months ended
December 31,2024
March 31,2025
June 30,2025
September 30,2025
December 31,2025
(in thousands)
Total revenue
$
40,658
$
41,383
$
41,382
$
43,401
$
46,149
Costs of revenue, exclusive of depreciation
(17,679
)
(17,127
)
(17,159
)
(17,573
)
(19,919
)
Depreciation allocable to costs of revenue
(8,349
)
(8,539
)
(8,873
)
(9,151
)
(9,735
)
Gross margin
14,630
15,717
15,350
16,677
16,495
Depreciation allocable to costs of revenue
8,349
8,539
8,873
9,151
9,735
Adjusted Gross Margin
$
22,979
$
24,256
$
24,223
$
25,828
$
26,230
Year Ended December 31,
2024
2025
(in thousands)
Total revenue
$
156,742
$
172,315
Costs of revenue, exclusive of depreciation
(68,756
)
(71,778
)
Depreciation allocable to costs of revenue
(30,813
)
(36,298
)
Gross margin
$
57,173
$
64,239
Depreciation allocable to costs of revenue
30,813
36,298
Adjusted Gross Margin
$
87,986
$
100,537
Non-GAAP Financial Measures - Adjusted EBITDA: "Adjusted EBITDA" is a non-GAAP financial measure that we define as net income (loss) before interest, taxes, depreciation and amortization, as well as an increase in inventory allowance, impairments, retirement of rental equipment, nonrecurring restructuring charges including severance and non-cash equity-classified stock-based compensation expenses. This term, as used and defined by us, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. Adjusted EBITDA should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. However, management believes Adjusted EBITDA is useful to an investor in evaluating our operating performance because: (i) it is widely used by investors in the energy industry to measure a company's operating performance without regard to items excluded from the calculation of Adjusted EBITDA, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors; (ii) it helps investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our capital structure and asset base from our operating structure; and (iii) it is used by our management for various purposes, including as a measure of operating performance, in presentations to our Board of Directors, ...
