Financial Data and Key Metrics Changes - The company reported a record-setting quarter for revenues and average revenue per horsepower, with average revenue reaching $21.31 per horsepower, a 1% increase sequentially and a 5% increase year-over-year [14][6] - Net income for the second quarter was $28.6 million, operating income was $76.6 million, and net cash provided by operating activities was $124.2 million [14][15] - Adjusted gross margins for the second quarter were 65.4%, with average utilization at 94.4%, consistent with the prior quarter [14][15] Business Line Data and Key Metrics Changes - The total fleet horsepower at the end of the quarter was approximately 3.9 million horsepower, unchanged from the previous quarter [15] - Average active horsepower remained flat at 3.55 million, with a slight decrease in total active horsepower sequentially [11][15] - The company acquired approximately 48,000 new horsepower in 2025, with 10,000 expected to be online by January 2026 [10] Market Data and Key Metrics Changes - The company anticipates a 5% increase in contracted horsepower in the Northeast by Q4 compared to current levels [6] - The July EIA short-term energy outlook projected a 6% annualized gas growth in the Permian, with natural gas production expected to grow in the Northeast and Haynesville [9] Company Strategy and Development Direction - The company is optimistic about future growth due to a significant number of RFQs in the pipeline, with top customers expected to increase production [7] - The shared services model with Energy Transfer is expected to yield benefits, including licensing savings and enhanced IT functionality [10] - The company continues to focus on cost management, particularly in parts, labor, and lube oil, with expectations of reduced costs through internal hiring and new vendor agreements [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged bearish macroeconomic factors but expressed confidence in the company's execution and demand for natural gas driven by AI and cloud services [6][8] - The company sees a shift from a supply-based to a demand-based natural gas market, indicating a positive long-term outlook for natural gas [64] Other Important Information - The company maintained its 2025 guidance for adjusted EBITDA in the range of $590 million to $610 million and distributable cash flow between $350 million and $370 million [16] - The leverage ratio is currently at 4.08 times, with expectations of a marginal increase later in the year as new growth projects are funded [16][17] Q&A Session Summary Question: Gross margin trends and new horsepower - Management indicated that gross margins have fluctuated between 65% to 67% over the past four years and expect them to align with historical averages as staffing improves [22][23] Question: Contracted horsepower in the Northeast - Approximately 25% to 30% of business in the Northeast is on month-to-month contracts, with expectations for better dollar per horsepower revenue in the coming months [25][26] Question: Sold or retired equipment - There were no material sales of equipment during the quarter, and utilization was flat, with expectations for increased active horsepower in Q4 [32][33] Question: G&A costs and shared services - G&A costs were lower due to shared services, but management cautioned against over-optimism regarding future savings as the integration process continues [34][36] Question: Demand for compression services - Demand is increasing across oil and gas producing basins, particularly in dry gas basins, with expectations for more contracting in the coming months [40] Question: Electric motor drive market - There has been a shift back to natural gas engine-driven compressors, with electric drive opportunities subsiding [42] Question: Capital allocation and distribution - The company aims to maintain distribution while reducing leverage, with plans to refinance existing notes to improve cash flow [44][46] Question: CapEx and equipment costs - The cost to acquire new horsepower has increased over the past two years, but the company is still able to achieve necessary margins [49][50] Question: Buying contract opportunities - There are opportunities for buying contracts, but the volume is flat compared to last year, with a focus on advantageous deals [57][58] Question: CapEx outlook and timing - The CapEx outlook spilling into 2026 is driven by delivery timing of ordered units rather than customer production schedules [59]