Key Takeaways PBA targets 2026 adjusted EBITDA of C$4.1B-C$4.4B, with fee-based growth due to higher volumes across assets.PBA plans C$1.6B in 2026 capital spending, with pipeline, facilities and Peace Pipeline system expansions.PBA plans C$1.6B in 2026 capital spending, with pipeline, facilities and Peace Pipeline system expansions.Pembina Pipeline Corporation (PBA) , a leader in North America's energy infrastructure, has outlined an ambitious growth strategy for 2026. This includes an increase in fee-base ...

Citigroup adjusts NYSE:USAC's stock grade to Neutral and raises the price target from $25 to $26.The acquisition of J-W Power Company for approximately $860 million is expected to enhance USAC's operational capabilities and market presence.Despite positive developments, USAC's stock price reflects a decrease of 2.73%, trading at $24.58.USA Compression Partners, LP (NYSE:USAC) is a key player in the natural gas compression industry, headquartered in Dallas, Texas. The company specializes in providing compres ...

Core Insights - Expectations for interest rate cuts are changing rapidly, leading to anticipated volatility in the U.S. stock market, particularly with uncertainty surrounding the leadership of the Federal Reserve [1] Group 1: Stock Recommendations - Low-beta stocks are recommended to navigate market volatility, including USA Compression Partners, LP (USAC), The Vita Coco Company, Inc. (COCO), Natural Gas Services Group, Inc. (NGS), and Agnico Eagle Mines Limited (AEM) [1] - USA Compression Partners is positioned to benefit from rising demand for cleaner fuels and higher LNG export volumes, with plans to add new equipment by year-end [6][7] - The Vita Coco Company is experiencing strong demand for its leading coconut water brand, indicating a positive business outlook [7][8] - Natural Gas Services is set to benefit from increased LNG exports and the construction of more pipelines, leading to higher demand for its compression equipment [9] - Agnico Eagle Mines, as the second-largest gold producer globally, has a strong financial position and a positive long-term outlook for the gold market [10] Group 2: Screening Criteria - Stocks with a beta between 0 and 0.6 are targeted for being less volatile than the market, alongside other criteria such as positive price movement over the last month, average trading volume greater than 50,000, and a minimum price of $5 [4][5] - Zacks Rank 1 stocks are expected to significantly outperform the broader U.S. equity market over the next one to three months [5]

Market Overview - The U.S. stock market is expected to remain volatile due to inflation concerns and policy uncertainty, impacting market sentiment [1] - It is advisable to invest in low-beta stocks to safeguard portfolios during this volatility [1] Beta Measurement - Beta measures the volatility of a stock relative to the market, with a beta of 1 indicating movement in line with the market [2][3] - Stocks with a beta greater than 1 are more volatile, while those with a beta less than 1 are less volatile [3] Stock Screening Criteria - Stocks with a beta between 0 and 0.6 are screened for lower volatility [4] - Additional criteria include positive price movement over the last month, average trading volume greater than 50,000, a minimum price of $5, and a Zacks Rank of 1 (Strong Buy) [5] Featured Low-Beta Stocks - **USA Compression Partners (USAC)**: Positioned to benefit from rising demand for cleaner fuels and plans to add new equipment by year-end, indicating growth potential [6][9] - **Futu Holdings (FUTU)**: A digital financial services provider experiencing rapid growth and increased client trust, expanding its global presence [7][9] - **Garrett Motion (GTX)**: A leading manufacturer of turbochargers focused on efficiency and emissions reduction, also exploring opportunities in advanced cooling technology for data centers [10][9]

Financial Data and Key Metrics Changes - The company reported record results in Q3, with adjusted EBITDA of $20.8 million, up approximately 15% year-over-year and 6% sequentially [6][14] - Total rental revenue grew 11.1% year-over-year and 4.9% sequentially to $41.5 million, reflecting a 27,000 horsepower increase during the quarter [14] - Net income was $5.8 million or $0.46 per diluted share, an increase of $800,000 year-over-year and $600,000 sequentially [15] Business Line Data and Key Metrics Changes - Rented horsepower ended the quarter at approximately 526,000, an 11% increase year-over-year and 5% sequentially [15] - Fleet utilization reached a record 84.1%, up 204 basis points year-over-year and 45 basis points sequentially [15] - The company added a significant number of large horsepower units under long-term contracts, with roughly half being electric units [5][8] Market Data and Key Metrics Changes - The company is seeing strong demand in oil production, particularly in production efficiency, reliability, and emissions performance [9] - Rising electricity demand and LNG infrastructure buildout are creating durable growth opportunities for compression services [9] - The company is optimistic about continued demand for compression, driven by AI and data center expansion [9] Company Strategy and Development Direction - The company plans to add approximately 90,000 horsepower over 2025 and early 2026, with a significant number of new large horsepower units already under contract [8] - The company aims to maintain a balance between shareholder returns and growth, as evidenced by the inaugural dividend and its increase [7][16] - The focus remains on technology leadership and service excellence to improve competitive positioning [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver improved performance despite global macroeconomic uncertainty [9] - The company raised its full-year 2025 adjusted EBITDA guidance to $78 million-$81 million, reflecting a 2% increase at the midpoint from previous guidance [17] - Preliminary expectations for 2026 growth CapEx are set at $50 million-$70 million, indicating another year of organic growth [17] Other Important Information - The company has improved its income tax receivable and is awaiting payment processing [11] - Capital expenditures totaled $41.9 million, with $39.1 million allocated to growth CapEx [15] - The leverage ratio was 2.5x, remaining the lowest among public compression peers [16] Q&A Session Summary Question: Can you talk about the outlook for 2026 and customer conversations? - Management noted that there is no hesitancy from customers regarding 2026 contracts, with a broad range of interest observed [22][23] Question: What are the opportunities for margin improvement? - Management indicated that margins are expected to remain in the low 60s in the near term, with potential for improvement through a shift to large horsepower [25] Question: Is the majority of demand still for gas lift in the Permian? - Management confirmed that while gas lift remains the majority, there is growing demand for data center natural gas loads [29][30] Question: How is the relationship with Devon Energy developing? - Management highlighted a long-term relationship with Devon, emphasizing technology and service quality as key drivers for expansion [46][47] Question: How does the company balance dividend increases with growth opportunities? - Management stated that while they aim for a growing dividend, it will not impact the ability to grow the business significantly [44][45] Question: What is the outlook for capital expenditures in 2026? - Management indicated that 2026 is expected to be in line with 2024, with significant growth opportunities anticipated [54][55]

Financial Data and Key Metrics Changes - The company reported record results in Q3, with adjusted EBITDA of $20.8 million, up approximately 15% year-over-year and 6% sequentially [6][14] - Total rental revenue grew 11.1% year-over-year and 4.9% sequentially to $41.5 million, driven by a 27,000 horsepower increase [14] - Net income was $5.8 million or $0.46 per diluted share, an increase of $800,000 year-over-year and $600,000 sequentially [14] - The leverage ratio was 2.5 times, up from 2.31 times in the previous quarter, remaining the lowest among public compression peers [16] Business Line Data and Key Metrics Changes - Rented horsepower ended the quarter at approximately 526,000, an 11% increase year-over-year and 5% sequentially [15] - Fleet utilization reached a record 84.1%, up 204 basis points year-over-year and 45 basis points sequentially [15] - Rental adjusted gross margin was $25.5 million, up $2.6 million year-over-year and $1.5 million sequentially, with a margin percentage of 61.5% [14] Market Data and Key Metrics Changes - The company is taking market share in large horsepower compression, with all new sets under long-term contracts [5] - Devon Energy now represents more than 10% of year-to-date revenue, indicating strong customer relationships [5] Company Strategy and Development Direction - The company plans to add approximately 90,000 horsepower over 2025 and early 2026, with significant new electric and gas units already under contract [8] - The company aims to optimize fleet assets and improve rental revenue per horsepower, which finished the quarter at $27.08 per horsepower per month, a 1.7% sequential increase [10] - The company is focused on balancing capital returns with growth opportunities, having initiated a quarterly dividend of $0.10 per share [7][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver improved performance despite global macroeconomic uncertainty, citing strong demand for compression tied to existing production [9] - The company anticipates continued growth in 2026, with preliminary expectations for growth CapEx of $50 million to $70 million [17] - Management highlighted the importance of technology and service excellence in maintaining competitive advantages [7][9] Other Important Information - The company is not focused on real estate investments but aims to convert non-productive assets into productive horsepower [11] - The company is seeing strong demand for compression driven by rising electricity demand and LNG infrastructure buildout [9] Q&A Session Summary Question: Can you talk about the outlook for 2026 and customer conversations? - Management noted that there is no hesitancy from customers regarding 2026 contracts, with a broad range of interest observed [22][23] Question: What are the opportunities for margin improvement? - Management indicated that margins are expected to remain in the low 60s in the near term, with potential for improvement through a mix shift to large horsepower [25] Question: Is the majority of demand still for gas lift in the Permian? - Management confirmed that while gas lift remains the majority, there is growing demand for data center natural gas loads, creating incremental opportunities [29][30] Question: How did the relationship with Devon Energy develop? - Management explained that the long-term relationship with Devon was strengthened by demonstrating the capabilities of their technology and service [46][47] Question: What is the outlook for capital expenditures in 2026? - Management indicated that 2026 is expected to be in line with 2024, with significant growth anticipated [54][55]

Financial Data and Key Metrics Changes - The company reported record results in Q3 2025, with adjusted EBITDA of $20.8 million, up approximately 15% year-over-year and 6% sequentially [5][12] - Total rental revenue grew 11.1% year-over-year and 4.9% sequentially to $41.5 million, driven by a 27,000 horsepower increase [12] - Net income was $5.8 million or $0.46 per diluted share, an increase of $800,000 year-over-year and $600,000 sequentially [13] - The leverage ratio was 2.5 times, up from 2.31 times in the previous quarter, remaining the lowest among public compression peers [15] Business Line Data and Key Metrics Changes - Rented horsepower increased to approximately 526,000, an 11% increase year-over-year and 5% sequentially [14] - Fleet utilization reached a record 84.1%, up 204 basis points year-over-year and 45 basis points sequentially [14] - Rental adjusted gross margin was $25.5 million, up $2.6 million year-over-year, with a margin percentage of 61.5%, reflecting sustained pricing discipline [12] Market Data and Key Metrics Changes - The company is taking market share in large horsepower compression, with all new sets under long-term contracts, half of which are large horsepower electric units [5] - The company noted strong demand for compression driven by oil production efficiency, reliability, and emissions performance [8] Company Strategy and Development Direction - The company plans to add approximately 90,000 horsepower over 2025 and early 2026, with significant new electric and gas units already under contract [7] - The company aims to optimize fleet assets and improve rental revenue per horsepower, which finished the quarter at $27.08 per horsepower per month, a 1.7% sequential increase [9] - The company is focused on converting non-productive assets into productive horsepower, enhancing fleet expansion [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering improved performance despite global macroeconomic uncertainty, citing strong demand for compression tied to existing production [8] - The company raised full-year 2025 adjusted EBITDA guidance to $78-$81 million, reflecting a 2% increase at the midpoint from previous guidance [16] - Preliminary expectations for 2026 growth CapEx are set at $50 million-$70 million, indicating continued organic growth [16] Other Important Information - The company paid out its inaugural quarterly dividend of $0.10 per share and plans to increase the fourth-quarter dividend by 10% to $0.11 per share [6] - The company maintains the best leverage position among its public compression peers, allowing for both growth and shareholder returns [6] Q&A Session Summary Question: Outlook for 2026 and customer conversations - Management noted that there is no hesitancy from customers regarding 2026 contracts, with a broad range of interest observed [20][22] - Lead times for new unit fabrication vary, but management is optimistic about meeting customer demand in the second half of 2026 [23] Question: Opportunities for margin improvement - Management indicated that margins are expected to remain in the low 60s in the near term, with potential for improvement through a mix shift to large horsepower [24] Question: End market uses for larger compressors - The majority of demand remains for gas lift in the Permian, but there is growing demand for data center natural gas loads, creating incremental opportunities [27] Question: CapEx outlook for 2026 - Management expects 2026 to be generally in line with 2024, with significant growth opportunities already contracted [46][47] Question: Increasing dividend and balancing growth - The decision to increase the dividend reflects confidence in future growth while maintaining a balance between capital returns and growth opportunities [39]

Financial Data and Key Metrics Changes - The company reported record results in Q3 2025, with adjusted EBITDA of $20.8 million, up approximately 15% year over year and 6% sequentially [7][19] - Total rental revenue grew 11.1% year over year and 4.9% sequentially to $41.5 million, reflecting a 27,000 horsepower increase during the quarter [18] - Net income was $5.8 million or $0.46 per diluted share, up $800,000 year over year and $600,000 sequentially [19] - The company raised its full-year 2025 adjusted EBITDA guidance to $78 million to $81 million from the previous range of $76 million to $80 million [7][22] Business Line Data and Key Metrics Changes - Rented horsepower ended the quarter at approximately 526,000, an 11% increase year over year and 5% sequentially [19] - Fleet utilization reached a record 84.1%, up 204 basis points year over year and 45 basis points sequentially [19] - Rental adjusted gross margin was $25.5 million, up $2.6 million year over year and $1.5 million sequentially, with a margin percentage of 61.5% [18] Market Data and Key Metrics Changes - The company continues to take market share in large horsepower compression, with all new sets under long-term contracts [6] - Devon Energy now represents more than 10% of year-to-date revenue, highlighting a significant customer relationship [6] Company Strategy and Development Direction - The company is focused on fleet optimization and technology leadership to enhance service excellence and competitive positioning [8][10] - There is a strong emphasis on expanding into new markets, including data centers and LNG infrastructure, which are expected to drive future growth [10][11] - The company plans to add approximately 90,000 horsepower over 2025 and early 2026, with a significant number of new large horsepower units already under contract [9][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver improved performance despite global macroeconomic uncertainty [10] - The company anticipates continued demand for compression driven by existing production and rising electricity demand [10] - Preliminary expectations for 2026 growth capital expenditures are set at $50 million to $70 million, indicating ongoing organic growth [22] Other Important Information - The company paid out its inaugural quarterly dividend of $0.10 per share and plans to increase the fourth-quarter dividend by 10% to $0.11 per share [7][21] - The leverage ratio was reported at 2.5 times, remaining the lowest among public compression peers [20] Q&A Session Summary Question: Can you talk about the outlook for 2026 and customer conversations? - Management noted that there is no hesitancy from customers regarding 2026 contracts, with a broad range of interest observed [28][29] Question: What are the opportunities for margin improvement? - Management indicated that margins are expected to remain in the low 60s in the near term, with potential for improvement through a mix shift to large horsepower [31] Question: Is the majority of demand still for gas lift in the Permian? - While gas lift in the Permian remains a significant portion, there is growing demand for data center natural gas load, creating incremental opportunities [36] Question: How is the relationship with Devon Energy developing? - The relationship has expanded significantly due to the company's technology and service capabilities, leading to increased horsepower contracts [50][51] Question: How does the company balance capital returns with growth opportunities? - Management emphasized a disciplined approach to capital allocation, ensuring that dividend increases do not hinder growth potential [48][49]

Core Insights - Natural Gas Services Group, Inc. (NGS) reported strong financial results for Q3 2025, with an increase in Adjusted EBITDA guidance for the full year to $78 - $81 million, up from $76 - $80 million, due to robust business performance and large horsepower unit deployments [1][4][3] Financial Performance - Rental revenue for Q3 2025 was $41.5 million, reflecting an 11.1% year-over-year increase and a 4.9% sequential increase [6][7] - Total revenue for Q3 2025 increased by 6.7% to $43.4 million compared to $40.7 million in Q3 2024, driven by higher rental revenues [7][6] - Adjusted EBITDA for Q3 2025 was $20.8 million, a 14.6% increase year-over-year and a 6.0% increase sequentially [12][6] - Net income for Q3 2025 was $5.8 million, or $0.46 per diluted share, compared to $5.0 million, or $0.40 per diluted share, in Q3 2024 [10][6] Operational Highlights - The company increased its rental fleet by 27,000 horsepower, resulting in record rented horsepower and utilization rates [3][6] - As of September 30, 2025, NGS had 526,015 rented horsepower, a 10.6% increase from 475,534 horsepower a year earlier [7][16] - The leverage ratio as of September 30, 2025, was 2.50x, indicating a stable financial position [13][6] Capital Expenditures and Guidance - NGS expects growth capital expenditures for 2025 to be in the range of $95 - $110 million, with maintenance expenditures anticipated at $11 - $14 million [5][4] - The company plans to deploy approximately 90,000 horsepower in large horsepower and electric motor drive compression, with deployments expected to continue into early 2026 [3][5] Dividend and Shareholder Returns - The company announced a 10% increase in its quarterly dividend, raising it to $0.11 per share, reflecting confidence in cash generation and a disciplined capital allocation strategy [3][6]

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] - Net income for Q3 2025 was $71 million, with adjusted net income of $73 million, equating to $0.42 per share [20] - The quarterly dividend per share increased by 20% year-over-year, with robust dividend coverage of 3.7 times [6][23] 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 [21] - Aftermarket services segment reported revenue of $56 million in Q3 2025, 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 aftermarket services maintained a gross margin percentage of 23% [15][22] Market Data and Key Metrics Changes - The U.S. natural gas infrastructure buildout continues to support strong performance, with expectations for continued growth into 2026 and beyond [5][7] - Natural gas production growth in the U.S. is expected to be in the low single digits, with significant demand anticipated from LNG exports and AI-driven power generation [9][10] - The compression industry is entering a durable upturn driven by natural gas demand growth and capital discipline across the energy sector [8] Company Strategy and Development Direction - The company aims to drive success through customer experience, innovative technology, and returns-based capital allocation, positioning itself for sustained growth in earnings and free cash flow [7][16] - Capital expenditures for growth in 2026 are expected to be no less than $250 million, consistent with historical investment levels [17][25] - 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 [17][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the structural growth in natural gas production and compression, focusing on expanding the business and enhancing earnings power [18][25] - The current environment is characterized by commodity price volatility and potential declines in oil volumes, but natural gas production is expected to grow [7][8] - Management highlighted the importance of maintaining operational efficiency and customer relationships to capitalize on market opportunities [34][60] 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 through dividends and share repurchases in the first three quarters of 2025 [17][23] - The company has a substantial contracted backlog and continues to book units for 2026 delivery to meet strong customer demand [12][25] Q&A Session Summary Question: Thoughts on deploying free cash flow and capital allocation - Management emphasized that the best use of cash remains investing in business growth, with plans to continue growing dividends and share repurchases while capitalizing on market opportunities [30][31] Question: Insights on margins and sustainability - Management noted that strong gross margins were achieved through pricing and excellent cost management, with ongoing investments in technology driving efficiency [32][34] Question: Demand side dynamics and customer discussions - Management observed robust demand for LNG and data centers, leading to increased discussions with customers and confidence in multi-year growth [38][41] Question: Lead times and customer behavior in a lower crude environment - Lead times for Caterpillar engines are currently at 60 weeks, with no major shifts in customer behavior noted despite seasonal activity [50][52] Question: Recontracting discussions and pricing mechanisms - Management indicated that a significant portion of contracts includes pricing mechanisms, allowing for continued pricing power in the market [60][61] Question: Input costs and inflation trends - Overall costs are trending at normalized levels of inflation, with manageable increases expected, particularly in labor costs in the Permian [63][65] Question: Future CapEx and market support - Management believes that a growth CapEx of $400 million to $500 million is feasible, supported by contracts despite supply chain constraints [92] Question: Update on new venture investments - Management provided updates on the Mach 4 natural gas liquid recovery project and other new ventures, emphasizing customer enthusiasm and the potential for market growth [84][86]