Financial Data and Key Metrics Changes - In Q3 2025, adjusted EPS increased by 50% compared to Q3 2024, and adjusted EBITDA rose by more than 46% [4][18] - Net income for Q3 2025 was $71 million, with adjusted net income of $73 million or $0.42 per share [18] - The quarterly dividend per share increased by 20% year-over-year, with a robust dividend coverage of 3.7 times [5][22] Business Segment Data and Key Metrics Changes - Contract operations revenue reached $326 million in Q3 2025, up 2% from Q2 2025, driven by growth in horsepower and pricing [19] - Aftermarket services segment reported revenue of $56 million in Q3 2025, up 20% from $47 million in the same period last year [20] - Adjusted gross margin percentage for contract operations was 70.4%, slightly up from the previous quarter, while aftermarket services maintained a gross margin of 23% [13][20] Market Data and Key Metrics Changes - The U.S. natural gas infrastructure build-out continues to support strong performance, with expectations for growth in natural gas production in the low single digits [4][7] - LNG exports are projected to grow by more than 17 BCF per day by 2030, with significant projects already under construction [8] - The compression industry is entering a durable upturn driven by natural gas demand growth and capital discipline across the energy sector [7][8] Company Strategy and Development Direction - The company aims to drive growth through customer experience, innovative technology, and returns-based capital allocation [6] - A growth CapEx of not less than $250 million is expected for 2026 to support infrastructure build-out in response to growing natural gas demand [15][16] - The company plans to maintain a target leverage ratio of between 3 to 3.5 times while continuing to return capital to shareholders through dividends and share repurchases [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's ability to generate positive free cash flow and increase returns to shareholders [16][17] - The current environment is characterized by commodity price volatility, but natural gas production growth is expected to continue [6][7] - Management highlighted the importance of maintaining operational efficiency and customer service to capitalize on market opportunities [6][30] Other Important Information - The company repurchased approximately 1.1 million shares for about $25 million in Q3 2025, with a total of $159 million returned to shareholders year-to-date [16][22] - The company has a substantial contracted backlog and continues to book units for 2026 delivery to meet strong customer demand [11][19] Q&A Session Summary Question: How does the company plan to deploy free cash flow? - Management emphasized that the best use of cash remains investing in business growth, with room to continue growing dividends and share repurchases [25][26] Question: What is the outlook for margins? - Management noted that margins have improved due to pricing gains and cost management, with expectations for continued improvement [29][30] Question: How is demand evolving for LNG and data centers? - Management indicated robust demand for LNG and data centers, with expectations for significant growth in both areas [32][34] Question: What are the lead times for equipment? - Lead times for Caterpillar engines are currently around 60 weeks, with some opportunities to acquire units sooner from the market [39] Question: How are input costs trending? - Overall costs are trending at a normalized level of inflation, with manageable levels for budgeting, although labor costs in the Permian remain under pressure [45][46]

Financial Data and Key Metrics Changes - In Q3 2025, adjusted EPS increased by 50% and adjusted EBITDA rose by more than 46% compared to Q3 2024 [5][20] - The quarterly dividend per share was up 20% year-over-year, with a robust dividend coverage of 3.7x [6][23] - Net income for Q3 2025 was reported at $71 million, with adjusted net income at $73 million, equating to $0.42 per share [20] Business Segment Data and Key Metrics Changes - Contract operations revenue reached $326 million in Q3 2025, up 2% sequentially, driven by growth in horsepower and pricing [21] - Aftermarket services segment revenue was $56 million, down from $65 million in Q2 2025 but up 20% from $47 million in the same period last year [22] - Adjusted gross margin percentage for contract operations was 70.4%, slightly up from the previous quarter, while the overall adjusted gross margin percentage was reported at 73% [15][20] Market Data and Key Metrics Changes - The U.S. natural gas infrastructure buildout continues to support robust performance, with expectations for continued growth into 2026 and beyond [5] - Natural gas production growth in the U.S. is expected to be in the low single digits, with significant demand pressures anticipated from LNG exports and AI-driven power generation [9][10] Company Strategy and Development Direction - The company aims to leverage its strong operational execution and customer service to drive growth, focusing on innovative technology and returns-based capital allocation [7] - A growth CapEx of not less than $250 million is expected for 2026, consistent with annual investment levels since 2023, to support infrastructure buildout [16][25] - The company plans to maintain a target leverage ratio of between 3x-3.5x while continuing to return capital to shareholders through dividends and share repurchases [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the structural growth in natural gas production and compression, highlighting a strong outlook for earnings and free cash flow generation [18] - The current environment is characterized by commodity price volatility, but natural gas production is expected to outpace oil production, supporting long-term growth [8][9] - Management noted that the compression industry is entering a durable upturn driven by natural gas demand growth and capital discipline across the energy sector [8] Other Important Information - The company repurchased approximately 1.1 million shares for about $25 million in Q3 2025, with an additional $100 million authorized for share repurchases [23][24] - The company reported a $9.9 million cash tax credit that contributed to the increase in gross margin [15][20] Q&A Session Summary Question: Thoughts on capital allocation given strong free cash flow - Management emphasized that the best use of capital remains investing in business growth, with plans to continue growing dividends and share repurchases while also considering M&A opportunities [29][30] Question: Insights on margin sustainability and drivers - Management highlighted that margins are driven by pricing prerogatives and excellent cost management, with technology investments improving operational efficiency [32][34] Question: Demand trends and customer discussions - Management noted robust demand for LNG and data centers, with increased discussions with customers translating into a positive multi-year growth outlook [38][40] Question: Lead times and customer behavior in a lower crude environment - Lead times for engines are currently at 60 weeks, with no major shifts in customer behavior observed, maintaining high levels of utilization across the industry [50][52] Question: Recontracting discussions and pricing mechanisms - Management indicated that a significant portion of contracts includes pricing mechanisms for repricing, allowing for continued pricing power in a high-utilization environment [56][57] Question: Update on new venture investments and market acceptance - Management provided updates on the Mach 4 natural gas liquid recovery project, noting successful pilot results and strong customer enthusiasm for the product [81][84]