NGS Reports Record-Breaking Earnings and Growth Outlook

Natural Gas Services ((NGS)) has held its Q3 earnings call. Read on for the main highlights of the call.

The latest earnings call for Natural Gas Services (NGS) painted a picture of strong positive performance, with the company achieving record-breaking metrics in several areas. Despite facing challenges such as supply chain constraints and delays in tax receivables, NGS’s growth outlook remains robust, buoyed by strategic investments and a leadership position in technology.

Record-Breaking Quarter Across Key Metrics

NGS reported a record quarter in total rented horsepower, horsepower utilization, adjusted EBITDA, and earnings per share. This impressive performance was driven by strong field service execution and technology-enabled uptime, highlighting the company’s operational efficiency and strategic prowess.

Significant Increase in Rented Horsepower

The company saw an increase of 27,000 in rented horsepower during the quarter, with all new sets being large horsepower under long-term contracts. This reflects a significant gain in market share, demonstrating NGS’s competitive edge in the industry.

Adjusted EBITDA Growth and Guidance Raise

NGS’s adjusted EBITDA reached $20.8 million, marking a 15% year-over-year increase. This growth has led the company to raise its full-year 2025 adjusted EBITDA guidance to a range of $78 million to $81 million, showcasing confidence in sustained financial performance.

Introduction and Increase of Quarterly Dividend

In a move to enhance shareholder value, NGS paid its inaugural quarterly dividend of $0.10 per share and announced a 10% increase for the fourth quarter to $0.11 per share, reflecting the company’s commitment to returning capital to shareholders.

Strong Rental Revenue Growth

Total rental revenue grew by 11.1% year-over-year and 4.9% sequentially, reaching $41.5 million. This growth underscores the company’s successful strategies in expanding its rental business and capturing market opportunities.

Fleet Utilization and Efficiency Improvements

Fleet utilization hit a record 84.1%, with rental adjusted gross margin percentage improving by 19 basis points year-over-year. These metrics highlight NGS’s operational efficiency and ability to maximize asset utilization.

Market Share Gains and Technology Leadership

NGS continues to gain market share through new technology and service excellence. The company’s growth capital to EBITDA ratio is higher than its competitors, indicating a strong position in the market driven by innovation and service quality.

Supply Chain Constraints

The company is facing supply chain constraints, with lead times for new unit fabrication approaching 60 weeks. This could impact NGS’s ability to meet customer demand in the first half of 2026, posing a challenge to its growth trajectory.

Income Tax Receivable Delays

NGS is experiencing delays in income tax receivables due to a federal government shutdown, affecting expected cash inflow. This delay poses a temporary financial challenge for the company.

Forward-Looking Guidance

During the earnings call, NGS provided guidance for fiscal year 2025, highlighting their record performance across multiple metrics. The company raised its full-year 2025 adjusted EBITDA guidance to a range of $78 million to $81 million. Looking ahead to 2026, NGS anticipates growth CapEx between $50 million to $70 million, driven by continued demand for compression services and significant contracted large horsepower units. This forward-looking guidance underscores the company’s strong market position and balanced approach to growth investments and shareholder returns.

In conclusion, Natural Gas Services has demonstrated a strong positive performance in its latest earnings call, with record-breaking achievements across key metrics. The company’s strategic investments and technology leadership have positioned it well for future growth, despite facing challenges such as supply chain constraints and tax receivable delays. Investors can look forward to continued robust performance and shareholder returns.