NGS Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Rental Revenue: Achieved a record of $49.4 million, up 25% year-over-year and 5% sequentially.

Adjusted EBITDA: Reached $25.1 million, a 27.4% increase year-over-year.

Net Income: Reported at $3.8 million ($0.30 per diluted share), impacted by $3.3 million in transaction costs from the Flatrock acquisition. Adjusted net income was $6.1 million ($0.47 per diluted share).

Horsepower Utilization: Increased to a record 88.3%, up from 78.6% three years ago.

Accounts Receivable: Improved Days Sales Outstanding (DSO) to approximately 33 days on a pro forma basis.

Capital Expenditures: Totaled $18.8 million, with $15.3 million allocated to growth capital.

2Strategic Updates and Business Highlights

Flatrock Acquisition: Completed in June 2026 for approximately $120 million, adding 87,000 rented horsepower and enhancing the electric motor-drive strategy.

Fleet Optimization: Significant improvements in pricing and fleet mix, with rental revenue per average horsepower per month rising to $28.06, a 30% increase over three years.

Operational Efficiency: Focus on data integration and predictive analytics to enhance service delivery and operational performance.

Market Position: NGS has grown its market share significantly, representing approximately 12% of organic growth capital deployed among its peers.

3Forward Guidance and Outlook

Adjusted EBITDA Guidance: Increased to $103 million - $108 million for the full year 2026, reflecting the Flatrock acquisition's contribution.

Growth Capital Expenditures: Revised upward to $60 million - $80 million, driven by new large horsepower and electric motor-drive additions.

Dividend: Maintained at $0.15 per share, reflecting confidence in cash flow durability.

4Bad News, Challenges, or Points of Concern

Inflationary Pressures: Ongoing cost increases in labor, lubricants, and parts may impact margins, although pricing discipline is expected to mitigate some effects.

Transaction Costs: The Flatrock acquisition incurred significant costs that impacted net income.

Supply Chain Constraints: Extended lead times for new compression equipment, particularly for large engines, could limit growth potential and operational flexibility.

5Notable Q&A Insights

Customer Growth Opportunities: CEO Justin Jacobs emphasized the potential for growth with existing customers and the acquisition of new customers, indicating a strong pipeline for future expansion.

Integration of Flatrock: Integration is progressing well, with opportunities identified in route density and procurement efficiencies, although no formal synergy targets were provided.

Contracting Terms: There is a potential for longer contract terms with customers, but this may come at the cost of price increases.

Sale-Leaseback Opportunities: Jacobs acknowledged the potential for sale-leaseback arrangements with customers, but noted the unpredictability of such opportunities. Overall, NGS reported strong financial performance in Q2 2026, driven by strategic growth initiatives, including the Flatrock acquisition, while navigating challenges related to inflation and supply chain constraints. The company remains optimistic about its growth trajectory and market opportunities.