Natural Gas Services Group, Inc. Reports Second Quarter 2025 Financial and Operating Results;
Midland, Texas, Aug. 11, 2025 (GLOBE NEWSWIRE) -- Natural Gas Services Group, Inc. ("NGS" or the "Company") (NYSE:NGS), a leading provider of natural gas compression equipment, technology, and services to the energy industry, today announced financial results for the three months ended June 30, 2025. The Company also provided updated guidance today, increasing both the low- and high-end of its full-year 2025 Adjusted EBITDA guidance to $76 - $80 million (from $74 - $79 million), citing continued strength in its business and contracted large horsepower unit deployments in the second half of 2025.
Second Quarter 2025 and Recent Highlights
Rental revenue of $39.6 million for the second quarter of 2025 representing a 13.3% year-over-year increase and a 1.7% sequential increase compared to the period ended March 31, 2025.
Net income of $5.2 million, or $0.41 per diluted share, for the second quarter of 2025 compared to net income of $4.3 million or $0.34 per diluted share for the comparable period; net income up $0.3 million or 6.9% sequentially.
Adjusted EBITDA of $19.7 million for the second quarter of 2025, representing a 19.5% year-over-year increase and up 1.9% sequentially. See Non-GAAP Financial Measures, Adjusted EBITDA, below.
Leverage ratio at June 30, 2025, was 2.31x.
Initiated first quarterly cash dividend of $0.10 per share and authorized a share repurchase program of up to $6 million, underscoring confidence in cash generation and a disciplined capital allocation strategy.
Management Commentary and Outlook "We delivered another record-setting quarter, reflecting the strength of our technology, our high level of service to customers, and our operational discipline," said Justin Jacobs, Chief Executive Officer. "Utilized rental horsepower reached an all-time high of 499,000. Adjusted EBITDA was a record $19.7 million in the second quarter which brings first-half Adjusted EBITDA to $39.0 million. We are deploying large-horsepower gas engine and electric motor units in key basins, and we are increasingly seeing opportunities to displace our competitors. While news around tariffs, commodity volatility, and broader macro uncertainty remain top of mind, we continue to see healthy demand for compression and our services."
"In light of our first-half performance and the scheduled deployment of large-horsepower units in the second half of the year, we are raising our full-year 2025 Adjusted EBITDA guidance to $76 - $80 million," said Jacobs. "We expect continued momentum through 2025 and into 2026, driven by new large horsepower unit sets."
Jacobs added, "Our confidence in the business and its trajectory led to the initiation of a quarterly dividend and the authorization of a share repurchase program. We are starting the dividend at a modest level as we are deploying relatively more capital into new units than our peers in 2025, and we expect that trend to continue in 2026. At the same time, we are maintaining flexibility to pursue both organic growth and accretive M&A opportunities."
"Our financial position remains a competitive strength. With the lowest leverage among public peers, 2.31x at quarter-end, and a demonstrated ability to monetize non-cash assets, we believe we are well positioned to capitalize on strategic opportunities."
Corporate Guidance, 2025 Outlook
Driven by strong first-half results, contractual large horsepower additions, and continued confidence in our ability to execute our strategy, the Company raises its full-year 2025 Adjusted EBITDA guidance to $76 - $80 million.
The Company expects 2025 growth capital expenditures of $95 - $115 million, the vast preponderance of which consists of new units under contract. Furthermore, we invest capital in new units only when we have a multi-year contract. The revision incorporates clearer timing for growth capex in the second half of 2025 and early 2026 tied to the deployment of approximately 90,000 horsepower. Customer deployments remain on schedule and the timing of deployments as previously noted is heavily weighted to the second half of 2025 and early 2026 as reflected by year-to-date capital expenditures. Additionally, the Company anticipates 2025 maintenance expenditures of $11 - $14 million and its target return on invested capital of 20% remains unchanged.
Outlook
NEW FY 2025 Adjusted EBITDA
$76 million - $80 million
FY 2025 Growth Capital Expenditures
$95 million - $115 million
FY 2025 Maintenance Capital Expenditures
$11 million - $14 million
Target Return on Invested Capital
At least 20%
Jacobs concluded, "We remain focused on operational excellence, disciplined capital allocation, and creating long-term value for our shareholders. With strong contracted growth, robust rental demand, and a flexible capital framework, we are confident in our ability to drive sustained performance through the remainder of 2025 and beyond."
Subsequent Events - 2025 Third Quarter
On July 30, 2025, our Board of Directors declared a cash dividend of $0.10 per share to stockholders of record as of August 8, 2025 expected to be paid on August 22, 2025.
On August 5, 2025, Brian Tucker, NGS management, and the Board reached the difficult decision that Mr. Tucker will transition out of his role as President and Chief Operating Officer. This was driven solely by an unfortunate and unexpected family loss which changed Mr. Tucker's personal circumstances. His transition will take place over the next several months with a target end date of October 31, 2025. Mr. Tucker remains fully committed to NGS during this time and beyond, if necessary. The Board and NGS management want to acknowledge not only the many significant contributions Brian has made to the success of the Company, but also the tremendous strength and dedication he has shown while facing an unexpected and profound personal challenge. We are deeply grateful for his leadership, his sacrifice, and the legacy he helped create.
On August 8, 2025, our Board of Directors approved a share repurchase program (the "Repurchase Plan"). The Repurchase Plan provides for the repurchase of shares of our common stock from time to time in the open market as conditions, cash reserves, cash flows and the evaluation of uses of cash for operations, growth and share repurchase may allow. The Repurchase Plan is authorized for up to $6 million and expires on August 6, 2027.
2025 Second Quarter Financial Results
Revenue: Total revenue for the three months ended June 30, 2025, increased 7.5% to $41.4 million from $38.5 million for the three months ended June 30, 2024. This increase was solely attributable to higher rental revenues for the comparable periods. Rental revenue increased 13.3% to $39.6 million from $34.9 million in the second quarter of 2024 due to the addition of higher horsepower packages and pricing improvements. As of June 30, 2025, we had 498,651 rented horsepower (1,198 utilized units) compared to 454,568 horsepower (1,242 utilized units) as of June 30, 2024, reflecting a 9.7% increase in total utilized horsepower.
Gross Margins and Adjusted Gross Margins: Total gross margins, including depreciation expense increased to $15.4 million for the three months ended June 30, 2025, compared to $13.4 million for the same period in 2024 and decreased on a sequential basis from $15.7 million for the three months ended March 31, 2025. Total adjusted gross margin, exclusive of depreciation expense, increased to $24.2 million for the three months ended June 30, 2025, compared to $21.0 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 June 30, 2025, was $9.9 million compared to operating income of $8.5 million for the comparable 2024 period. On a sequential basis, operating income increased $0.4 million compared to $9.5 million for the period ended March 31, 2025.
Net Income: Net income for the three months ended June 30, 2025, was $5.2 million, or $0.41 per diluted share, compared to net income of $4.3 million, or $0.34 per diluted share, for the comparable 2024 period. On a sequential basis, net income increased $0.3 million when compared to net income of $4.9 million, or $0.38 per diluted share, in the first quarter of 2025. The significant year-over-year increase in net income was driven by the material increase in rental revenue and the associated gross margin impact, partially offset by higher selling, general and administrative expense and rental equipment depreciation. The sequential improvement in net income was primarily driven by the retirement of primarily small horsepower rental equipment in the first quarter, partially offset by higher rental depreciation in the second quarter.
Cash Flows: As of June 30, 2025, cash and cash equivalents were $0.3 million, while working capital was $24.1 million. For the three months ended June 30, 2025, cash flows provided by operating activities were $11.0 million, while cash flows used in investing activities was $25.7 million. This compares to cash flows from operating activities of $25.5 million and cash flows used in investing activities of $16.9 million for the comparable three-month period in 2024. Cash flow used in investing activities during the second quarter of 2025 included $25.8 million in capital expenditures.
Adjusted EBITDA: Adjusted EBITDA increased 19.5% to $19.7 million for the three months ended June 30, 2025, from $16.5 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 1.9% when compared to $19.3 million for the three months ended March 31, 2025.
Debt: Outstanding debt on our revolving credit facility as of June 30, 2025, was $182.0 million. Our leverage ratio as of June 30, 2025, was 2.31x and our fixed charge coverage ratio was 3.04x. 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
June 30, 2024
September 30, 2024
December 31, 2024
March 31, 2025
June 30, 2025
(in thousands)
Rental
$ 34,926
$ 37,350
$ 38,226
$ 38,910
$ 39,580
Sales
2,270
1,843
997
1,927
750
Aftermarket services
1,295
1,493
1,435
546
1,052
Total
$ 38,491
$ 40,686
$ 40,658
$ 41,383
$ 41,382
Gross Margin
Three months ended
June 30, 2024
September 30, 2024
December 31, 2024
March 31, 2025
June 30, 2025
(in thousands)
Rental
$ 13,211
$ 15,043
$ 14,865
$ 15,634
$ 15,294
Sales
(50)
(258)
(531)
(181)
(254)
Aftermarket services
269
151
296
264
310
Total
$ 13,430
$ 14,936
$ 14,630
$ 15,717
$ 15,350
Adjusted Gross Margin (1)
Three months ended
June 30, 2024
September 30, 2024
December 31, 2024
March 31, 2025
June 30, 2025
(in thousands)
Rental
$ 20,698
$ 22,908
$ 23,107
$ 24,070
$ 24,052
Sales
21
(185)
(449)
(89)
(161)
Aftermarket services
283
169
321
275
332
Total
$ 21,002
$ 22,892
$ 22,979
$ 24,256
$ 24,223
Adjusted Gross Margin %
Three months ended
June 30, 2024
September 30, 2024
December 31, 2024
March 31, 2025
June 30, 2025
Rental
59.3 %
61.3 %
60.4 %
61.9 %
60.8 %
Sales
0.9 %
(10.0) %
(45.0) %
(4.6) %
(21.5) %
Aftermarket services
21.9 %
11.3 %
22.4 %
50.4 %
31.6 %
Total
54.6 %
56.3 %
56.5 %
58.6 %
58.5 %
Compression Statistics (at end of period):
Three months ended
June 30, 2024
September 30, 2024
December 31, 2024
March 31, 2025
June 30, 2025
Horsepower Utilized
454,568
475,534
491,756
492,679
498,651
Total Horsepower
552,599
579,699
598,840
603,391
596,322
Horsepower Utilization
82.3 %
82.0 %
82.1 %
81.7 %
83.6 %
Units Utilized
1,242
1,229
1,208
1,202
1,198
Total Units
1,899
1,909
1,912
1,916
