Natural Gas Services (US:NGS)2025-11-10 21:26Revenue Performance - Rental revenues for Q3 2025 were $41,502,000, an increase of 11.5% from $37,350,000 in Q3 2024[70] - Total revenues for Q3 2025 reached $43,401,000, up from $40,686,000 in Q3 2024, reflecting a growth of 6.7%[70] - Rental revenue for the three months ended September 30, 2025, was $41,502, an increase of $4,152 or 11.1% compared to $37,350 in 2024[83] - Total revenues for the nine months ended September 30, 2025, increased by 17.4% to $26,854 million compared to $22,878 million in 2024[91] Profitability Metrics - Adjusted Gross Margin for Q3 2025 was $25,828,000, compared to $22,892,000 in Q3 2024, indicating a year-over-year increase of 12.7%[78] - Adjusted EBITDA for Q3 2025 was $20,838,000, up from $18,186,000 in Q3 2024, representing a growth of 14.5%[81] - Rental adjusted gross margin for the nine months ended September 30, 2025, was $73,654, reflecting a $9,428 increase or 14.7% from $64,226 in 2024[83] - The percentage of rental adjusted gross margin increased to 61.4% for the nine months ended September 30, 2025, compared to 60.6% in 2024[83] - Aftermarket services adjusted gross margin increased to $273 for the three months ended September 30, 2025, representing a 61.5% increase from $169 in 2024[87] Operational Metrics - Rented horsepower at the end of Q3 2025 was 526,015, an increase from 475,534 in Q3 2024, showing a growth of 10.6%[70] - Average rented horsepower for Q3 2025 was 510,885, compared to 449,394 in Q3 2024, reflecting a 13.7% increase[70] - Horsepower utilization at the end of Q3 2025 was 84.1%, up from 82.0% in Q3 2024[70] - The company placed a total of 229 newly set units into service through September 30, 2025, including 78 large horsepower units[83] Expenses and Costs - Total selling, general and administrative (SG&A) expenses for the three months ended September 30, 2025, were $5,870, an increase of $411 or 7.5% from $5,459 in 2024[89] - Stock-based compensation increased to $612 for the three months ended September 30, 2025, reflecting a $90 increase or 17.2% from $522 in 2024[89] - Depreciation and amortization expense increased by 14.4% to $9,249 million for the three months ended September 30, 2025, compared to $8,086 million in 2024[91] Financial Position - As of September 30, 2025, the company had $208.0 million outstanding under its Credit Facility with a weighted average interest rate of 7.04%[116] - Total capitalization as of September 30, 2025, was $479.4 million, with debt constituting 43.4% of total capitalization[114] - The company borrowed $38.0 million net under the Credit Facility during the nine months ended September 30, 2025, compared to net repayments of $1.0 million in the same period of 2024[113] - The borrowing base under the Credit Facility was $371.0 million as of September 30, 2025, leaving $163.0 million available for borrowing[116] - The company is in compliance with all financial covenants in its Credit Facility as of September 30, 2025[116] Market Outlook - The company expects continued demand for its compressor fleet, assuming crude oil prices remain stable[72] - The market outlook for natural gas production in the U.S. is steady, with opportunities for increased utilization of small and medium horsepower units in shale gas development[73] Impairments and Other Income - The company recorded an impairment loss of $136 million in 2024, with no impairments reported for 2025[93] - Other income improved significantly to $222 million for the three months ended September 30, 2025, compared to a loss of $15 million in 2024[100] Taxation - Income tax expense increased by 29% to $1,779 million for the three months ended September 30, 2025, from $1,383 million in 2024[101] - The effective income tax rate rose to 23.5% for the three months ended September 30, 2025, compared to 21.6% in 2024[101] Cash Flow and Investments - Cash provided by operating activities for the nine months ended September 30, 2025, was $49.1 million, a decrease of $8.0 million compared to the same period in 2024[111] - The company invested approximately $86.9 million in rental equipment and property for the nine months ended September 30, 2025, compared to $57.4 million in 2024[112] - The company anticipates that cash on hand, cash flows from operating activities, and borrowings will be sufficient to meet capital, dividend, and liquidity requirements for at least the next twelve months[105] - Capital expenditures for 2025 will depend on customer compression requirements and capital availability, while maintaining prudent levels of debt[104] - The company has a right to request an increase in the Credit Facility commitment of up to $100.0 million, subject to certain conditions[114]