What changed in this filing

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Item 1. Financial Statements

2024-11-14 compared with 2024-08-14 · 208 added, 183 removed, 317 unchanged (55% of the section changed)

3 unchanged sentences

(in thousands, except par value)

June 30, December 31,

September 30, December 31,

Current Assets:

1 unchanged sentence

$ 410 $ 2,746

Trade accounts receivable, net of allowance for doubtful accounts of $ 1,110 and $ 823 , respectively

Trade accounts receivable, net of allowance for credit losses of $ 1,248 and $ 823 , respectively

24,809 39,186

Inventory, net of allowance for obsolescence of $ 2,836

Inventory, net of allowance for obsolescence of $ 2,836 for each of the dates presented, respectively

20,175 21,639

3 unchanged sentences

58,983 76,271

Long-term inventory, net of allowance for obsolescence of $ 1,168

Long-term inventory, net of allowance for obsolescence of $ 1,168 for each of the dates presented, respectively

Rental equipment, net of accumulated depreciation of $ 211,841 and $ 191,745 , respectively

21 unchanged sentences

Retained earnings 148,643 134,281

Treasury shares, at cost, 1,310 shares

Treasury shares, at cost, 1,310 shares for each of the dates presented, respectively

( 15,004 ) ( 15,004 )

5 unchanged sentences

(in thousands, except earnings per share)

Three months ended Six months ended

June 30, June 30,

Three months ended Nine months ended

September 30, September 30,

2024 2023 2024 2023

Rental income $ 34,926 $ 24,105 $ 68,660 $ 46,828

Rental $ 37,350 $ 27,705 $ 106,010 $ 74,533

Sales 1,843 1,413 6,616 6,000

11 unchanged sentences

Depreciation and amortization 8,086 6,807 22,878 19,390

Impairment expense — 779 — 779

Impairments 136 — 136 779

Retirement of rental equipment — — 5 —

5 unchanged sentences

( 15 ) ( 87 ) 148 254

Total other income (expense), net ( 2,962 ) 41 ( 5,704 ) 156

Total other expense

( 3,060 ) ( 1,687 ) ( 8,764 ) ( 1,531 )

Income before provision for income taxes 6,397 3,217 18,518 4,487

14 unchanged sentences

Shares Amount Shares Amount Shares Amount

BALANCES, January 1, 2023 — $ — 13,519 $ 135 $ 115,411 $ 129,534 1,310 $ ( 15,004 ) $ 230,076

January 1, 2023 — $ — 13,519 $ 135 $ 115,411 $ 129,534 1,310 $ ( 15,004 ) $ 230,076

Compensation expense on common stock options — — — — 22 — — — 22

Issuance of restricted stock — — 29 — — — — — —

Compensation expense on restricted common stock — — — — 465 — — — 465

Compensation expense on restricted stock units — — — — 465 — — — 465

Taxes paid related to net shares settlement of equity awards — — — — ( 184 ) — — — ( 184 )

Net income — — — — — 370 — — 370

BALANCES, March 31, 2023 — $ — 13,548 $ 135 115,714 $ 129,904 1,310 $ ( 15,004 ) $ 230,749

March 31, 2023 — $ — 13,548 $ 135 115,714 $ 129,904 1,310 $ ( 15,004 ) $ 230,749

Issuance of restricted stock — — 140 1 ( 1 ) — — — —

Compensation expense on common stock options — — — — 30 — — — 30

Compensation expense on restricted common stock — — — — 1,100 — — — 1,100

Compensation expense on restricted stock units — — — — 1,100 — — — 1,100

Taxes paid related to net shares settlement of equity awards — — — — ( 798 ) — — — ( 798 )

Net loss — — — — — 504 — — 504

BALANCES, June 30, 2023 — $ — 13,688 $ 136 $ 116,045 $ 130,408 1,310 $ ( 15,004 ) $ 231,585

Net income — — — — — 504 — — 504

June 30, 2023 — $ — 13,688 $ 136 116,045 $ 130,408 1,310 $ ( 15,004 ) $ 231,585

Compensation expense on common stock options — — — — 22 — — — 22

Compensation expense on restricted common stock — — — — 187 — — — 187

Net income — — — — — 2,171 — — 2,171

September 30, 2023 — $ — 13,688 $ 136 $ 116,254 $ 132,579 1,310 $ ( 15,004 ) $ 233,965

See accompanying notes to these unaudited condensed consolidated financial statements.

4 unchanged sentences

Shares Amount Shares Amount Shares Amount

BALANCES, January 1, 2024 — $ — 13,688 $ 137 $ 116,480 $ 134,281 1,310 $ ( 15,004 ) $ 235,894

January 1, 2024 — $ — 13,688 $ 137 $ 116,480 $ 134,281 1,310 $ ( 15,004 ) $ 235,894

Compensation expense on common stock options — — — — 29 — — — 29

Compensation expense on restricted common stock — — — — 245 — — — 245

Compensation expense on restricted stock units — — — — 245 — — — 245

Taxes paid related to net shares settlement of equity awards — — 6 — — — — — —

Net income — — — — — 5,098 — — 5,098

BALANCES, March 31, 2024 — — 13,694 137 116,754 139,379 1,310 $ ( 15,004 ) 241,266

March 31, 2024 — — 13,694 137 116,754 139,379 1,310 $ ( 15,004 ) 241,266

Compensation expense on common stock options — — — — 46 — — — 46

Compensation expense on restricted common stock — — — — 196 — — — 196

Issuance of restricted stock — — 33 — — — — —

Compensation expense on restricted stock units — — — — 196 — — — 196

Taxes paid related to net shares settlement of equity awards — — — — ( 98 ) — — — ( 98 )

Net income — — — — — 4,250 — — 4,250

BALANCES, June 30, 2024 — $ — 13,727 $ 137 $ 116,898 $ 143,629 1,310 $ ( 15,004 ) $ 245,660

June 30, 2024 — — 13,727 137 116,898 143,629 1,310 $ ( 15,004 ) 245,660

Exercise of common stock options — — 7 — 70 — — — 70

Issuance of restricted stock — — 7 — — — — — —

Compensation expense on common stock options — — — — 66 — — — 66

Compensation expense on restricted stock and performance share units — — — — 456 — — — 456

Taxes paid related to net shares settlement of equity awards — — — — ( 80 ) — — — ( 80 )

Net income — — — — — 5,014 — — 5,014

September 30, 2024 — $ — 13,741 $ 137 $ 117,410 $ 148,643 1,310 $ ( 15,004 ) $ 251,186

See accompanying notes to these unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Six months ended

Nine months ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

5 unchanged sentences

Stock-based compensation 1,038 1,826

Provision from credit losses 287 128

Impairment expense — 779

Provision for credit losses 433 199

Impairments 136 779

Gain on sale of assets ( 475 ) ( 281 )

6 unchanged sentences

Accounts payable and accrued liabilities 1,271 14,951

Deferred income ( 418 ) ( 37 )

Deferred revenue ( 418 ) ( 37 )

Other ( 667 ) 543

7 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from loan 8,000 75,011

Repayment of loan ( 9,000 ) —

Proceeds from credit facility borrowings 8,000 103,000

Repayment of credit facility borrowings ( 9,000 ) —

Payments of other long-term liabilities, net ( 622 ) ( 50 )

Payments of debt issuance costs ( 962 ) ( 2,131 )

Proceeds from exercise of stock options 70 —

Taxes paid related to net share settlement of equity awards ( 178 ) ( 982 )

8 unchanged sentences

Transfer of rental equipment to inventory $ — $ 708

Right of use asset acquired through a finance lease $ 1,751 $ 63

Right of use assets acquired through a finance lease $ 2,174 $ 63

Right of use asset acquired through an operating lease $ 520 $ —

See accompanying notes to these unaudited condensed consolidated financial statements.

3 unchanged sentences

Natural Gas Services Group, Inc.

(the "Company", “NGS”, "Natural Gas Services Group", "we" or "our") (a Colorado corporation), is a leading provider of natural gas compression equipment and services to the energy industry.

We design, rent, sell, service and maintain natural gas compressors for oil and natural gas production and plant facilities, generally using equipment from third-party fabricators and OEM suppliers along with limited in-house assembly.

NGS is headquartered in Midland, Texas, with a fabrication facility located in Tulsa, Oklahoma, a rebuild shop in Midland, Texas, and service facilities located in major oil and natural gas producing basins in the U.S.

(the “Company,” “NGS,” “Natural Gas Services Group,” “we,” “us” or “our”) (a Colorado corporation), is a leading provider of natural gas compression equipment, technology and services to the energy industry.

We rent, design, sell, install, service and maintain natural gas compressors for oil and natural gas production and processing facilities, generally using equipment from third-party fabricators and OEM suppliers along with limited in-house assembly.

NGS is headquartered in Midland, Texas, with an assembly facility located in Tulsa, Oklahoma, a rebuild shop in Midland, Texas, and service facilities located in major oil and natural gas producing basins in the U.S.

We operate in one reportable segment.

The Company was formed on December 17, 1998.

1 unchanged sentence

Principles of Consolidation and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, its subsidiary, NGSG Properties, LLC, which owns the Company's headquarters office building and the rabbi trust associated with the Company's deferred compensation plan.

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of the Company, its subsidiary, NGSG Properties, LLC, which owns the Company’s headquarters office building and the rabbi trust associated with our deferred compensation plan.

All significant intercompany accounts and transactions for the periods presented have been eliminated in consolidation.

These financial statements include all adjustments, consisting of only normal recurring adjustments, which are necessary to make our financial position at June 30, 2024 and the results of our operations for the three months and six ended June 30, 2024 and 2023 not misleading.

Some adjustments may cause the prior year number in these financial statements to differ from the prior year interim financial statements.

These financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary for the fair presentation of our financial position at September 30, 2024 and the results of our operations for the three months and nine months ended September 30, 2024 and 2023.

As permitted by the rules and regulations of the Securities and Exchange Commission (the “SEC”), the accompanying Condensed Consolidated Financial Statements do not include all disclosures normally required by generally accepted accounting principles in the United States of America (“GAAP”).

These financial statements should be read in conjunction with the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 on file with the SEC.

In our opinion, the condensed consolidated financial statements are a fair presentation of the financial position, results of operations, changes in stockholders' equity and cash flows for the periods presented.

The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2024.

In our opinion, the Condensed Consolidated Financial Statements represent a fair representation of our financial position, results of operations, changes in stockholders’ equity and cash flows for the periods presented.

The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2024.

Revenue Recognition Policy

7 unchanged sentences

and (v) recognize revenue when, or as, we satisfy the performance obligation(s).

Shipping and handling costs incurred are accounted for as fulfillment costs and are included in cost of revenues in our Consolidated Statements of Operations.

Shipping and handling costs incurred are accounted for as fulfillment costs and are included in cost of revenues in our Condensed Consolidated Statements of Operations.

Nature of Goods and Services

The following is a description of principal activities from which the Company generates its revenue:

The following is a description of principal activities from which we generate our revenue:

Rental Revenue.

The Company generates revenue from renting compressors to our customers.

We generate revenue from renting compressors to our customers.

These contracts, which all qualify as operating leases under ASC Topic 842, Leases (“ASC 842”), may also include a fee for servicing the compressor during the rental contract.

1 unchanged sentence

Our revenue is recognized over time, with monthly payments over the term of the contract.

After the terms of the contract have expired, a customer may renew their contract or continue renting on a monthly basis thereafter.

In accordance with ASC 842 – Leases, we have applied the practical expedient ASC 842-10-15-42A, which allows the Company to combine lease and non-lease components.

After the term of the contract has expired, a customer may renew its contract or continue renting on a monthly basis thereafter.

In accordance with ASC 842, we have applied the practical expedient which allows us to combine lease and non-lease components.

Sales Revenue .

The Company generates revenue by the sale of custom/fabricated compressors and parts, as well as exchange/rebuilding customer owned compressors and sale of used rental equipment.

Our sales revenue is recognized in accordance with ASC 606.

Custom compressors - The Company designs and assembles compressors based on the customer’s specifications outlined in their contract.

We generate revenue by the sale of custom/fabricated compressors and parts, as well as exchange/rebuilding customer owned compressors and sale of used rental equipment.

Our sales revenue is recognized in accordance with ASC Topic 606, Revenues from Customers.

Custom compressors - We design and coordinate the assembly of compressors based on our customer’s specifications outlined in their contract.

Though the equipment being built is customized by the customer, control under these contracts does not pass to the customer until the compressor is completed and shipped, or in accordance with a bill and hold arrangement, in which the customer accepts title and assumes the risk and rewards of ownership at a specified time.

We request some of our customers to make progressive payments as the compressor is being built;

these payments are recorded as a contract liability on the Accrued Liability line on the consolidated balance sheet until control has been transferred.

We request certain of our customers to make progressive payments as the compressor is being built;

these payments are presented as deferred revenue within Accrued liabilities on the Condensed Consolidated Balance Sheet until control has been transferred.

These contracts also may include an assurance warranty clause to guarantee the product is free from defects in material and workmanship for a set duration of time;

3 unchanged sentences

The amount of revenue recognized is not adjusted for expected returns, as our historical part returns have been de minimis.

Exchange or rebuild customer owned compressors - Based on the contract, the Company will either exchange a new/rebuilt compressor for the customer’s malfunctioning compressor or rebuild the customer’s compressor.

Exchange or rebuild customer-owned compressors - Based on the contract, we will either exchange a new/rebuilt compressor for the customer’s malfunctioning compressor or rebuild the customer’s compressor.

Revenue is recognized after control of the replacement or rebuilt compressor has transferred to the customer based on the terms of the contract, i.e., by physical delivery, delivery and installment, or shipment of the compressor.

3 unchanged sentences

Aftermarket Service Revenue .

The Company provides routine or call-out services on customer owned equipment as well as commissioning of new units for customers.

We provide routine or call-out services on customer owned equipment as well as commissioning of new units for customers.

Revenue is recognized after services in the contract are rendered.

2 unchanged sentences

Disaggregation of Revenue

The following table shows the Company's revenue disaggregated by product or service type for the three months and six months ended June 30, 2024 and 2023:

Three months ended June 30,

Six months ended June 30,

The following table summarizes our revenue disaggregated by product or service type for the periods presented:

Three months ended September 30,

Nine months ended September 30,

2024 2023 2024 2023

5 unchanged sentences

ASC 842 rental revenue

37,350 27,705 106,010 74,533

Total revenue $ 40,686 $ 31,369 $ 116,084 $ 84,946

Contract Balances

As of June 30, 2024 and December 31, 2023, we had the following receivables and deferred income from contracts with customers:

June 30, 2024 December 31, 2023

We had the following receivables and deferred revenue from contracts with customers as of the dates presented:

September 30, 2024 December 31, 2023

(in thousands)

Accounts Receivable

Accounts receivable - contracts with customers $ 5,593 $ 7,138

Accounts receivable - ASC 842 28,518 32,871

Sales and aftermarket services $ 4,394 $ 7,138

Rentals 21,663 32,871

Total Accounts Receivable 26,057 40,009

Allowance for doubtful accounts ( 1,110 ) ( 823 )

Allowance for credit losses

( 1,248 ) ( 823 )

Total Accounts Receivable, net $ 24,809 $ 39,186

Deferred income $ — $ 418

The Company recognized sales revenues of $ 0.4 million for the six months ended June 30, 2024 that was included in accrued liabilities at the beginning of 2024.

The decrease in accounts receivable and deferred income were primarily due to normal timing differences between our performance and the customers’ payments.

Deferred revenue $ — $ 418

We recognized sales revenues of $ 0.4 million for the nine months ended September 30, 2024 that was included in accrued liabilities at the beginning of 2024.

Remaining Performance Obligations

As of June 30, 2024, the Company had no deferred revenue related to unsatisfied performance obligations.

As of September 30, 2024, we had no deferred revenue related to unsatisfied performance obligations.

Contract Costs

The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less.

These costs are included in selling, general and administrative expenses on our condensed consolidated statements of operations.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases, and operating losses and tax credit carryforwards.

We recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that we otherwise would have recognized is one year or less.

These costs are included within Selling, general and administrative expenses in our Condensed Consolidated Statements of Operations.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

1 unchanged sentence

To the extent we establish a valuation allowance or increase this allowance in a period, we include an expense in the tax provision in our Condensed Consolidated Statements of Operations.

We account for uncertain tax positions in accordance with guidance in ASC 740, which prescribes the minimum recognition threshold a tax position taken or expected to be taken in a tax return is required to meet before being recognized in the condensed consolidated financial statements.

With respect to uncertain tax positions, GAAP prescribes the minimum recognition threshold a tax position taken or expected to be taken in a tax return is required to meet before being recognized in the Condensed Consolidated Financial Statements.

Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities.

1 unchanged sentence

A liability for unrecognized tax benefits is recorded for any tax benefits claimed in our tax returns that do not meet these recognition and measurement standards.

We have no liabilities for uncertain ta x positions as of June 30, 2024.

Our policy regarding income tax interest and penalties is to expense those items as interest expense and other expense, respectively.

We had no liabilities for uncertain ta x positions as of September 30, 2024 and December 31, 2023.

Our policy regarding income tax interest and penalties is to charge those items as components of interest expense and other expense, respectively.

Capitalized Interest

The Company capitalizes interest from external borrowings on significant expenditures for the fabrication of its natural gas compressor equipment until such projects are ready for their intended use.

We capitalize interest from external borrowings on significant expenditures for the assembly of our natural gas compressor equipment until such projects are ready for their intended use.

Capitalized interest is added to the cost of the underlying asset and is amortized over the useful lives of the assets in the same manner as the underlying assets.

For the three months ended June 30, 2024 and 2023, the Company capitalized interested aggregating approximately $ 1.2 million and $ 1.8 million.

For the six months ended June 30, 2024 and 2023, th e Company capitalized interest aggregating approximately $ 2.4 million a nd $ 2.7 million , respe ctively.

For the three months ended September 30, 2024 and 2023, we capitalized interest aggregating approximately $ 1.2 million and $ 1.4 million, respectively.

For the nine months ended September 30, 2024 and 2023, we capitalized interest aggregating approximately $ 3.6 million a nd $ 4.1 million , respe ctively.

Recently Issued Accounting Pronouncements

In December 2023, the Financial Standards Accounting Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09 “Income Taxes (Topics 740):

Improvements to Income Tax Disclosures” to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid.

Improvements to Income Tax Disclosures” (“ASU 2023-09”) to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid.

ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted.

The Company is currently evaluating the potential effect that the updated standard will have on the financial statement disclosures.

We are currently evaluating the potential effect that ASU 2023-09 will have on our Consolidated Financial Statement disclosures.

In November 2023, the FASB issued ASU 2023-07 “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures” which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

Improvements to Reportable Segment Disclosures” (“ASU 2023-07”) which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for our annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted.

The adoption is not expected to have a material impact on the Company’s Consolidated Financial Statements or disclosures.

Our inventory, net of allowance for obsolescence of $ 4.0 million at June 30, 2024 and December 31, 2023, consisted of the following amounts:

June 30, 2024 December 31, 2023

The adoption of ASU 2023-07 is not expected to have a material impact on our Consolidated Financial Statements or disclosures.

In November 2024, the FASB issued ASU 2024-03 “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expense ” (“ASU 2024-03”) which expands annual and interim disclosures expenses for certain types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, selling, general & administrative expenses, and research and development).

ASU 2024-03 is effective for our annual periods beginning January 1, 2027, and for interim periods beginning January 1, 2028, with early adoption permitted.

The adoption of ASU 2024-03 is not expected to have a material impact on our Consolidated Financial Statements or disclosures.

The following table summarizes the components of our inventory, net of allowance for obsolescence, as of the dates presented:

September 30, 2024 December 31, 2023

(in thousands)

5 unchanged sentences

Inventory - total $ 21,218 $ 22,340

Our long-term inventory consists of raw materials that remain viable but that the Company does not expect to sell or use within one year.

Our long-term inventory consists of raw materials that remain viable but that we do not expect to sell or use within one year.

Inventory Allowance

We routinely review our inventory allowance balance to account for slow moving or obsolete inventory costs that may not be recoverable in the future.

A summary of our inventory allowance is as follows:

June 30, 2024 December 31, 2023

A summary of activity in our inventory allowance is as follows, for the periods presented:

Nine months ended Year ended

September 30, 2024 December 31, 2023

(in thousands)

5 unchanged sentences

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act ” ) was enacted in response to the economic impact caused by the COVID-19 pandemic.

The CARES Act allowed NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid federal income taxes.

The Company generated significant NOLs during 2018 and 2019, and has filed amended returns to carryback these losses for five years.

Accordingly, during 2020, the Company recorded a federal income tax receivable of $ 15.0 million and an increase to its deferred income tax liability of $ 10.1 million on its condensed consolidated balance sheet.

During the third quarter of 2020, the Company received refunds totaling $ 3.9 million related to its 2018 NOLs, which reduced its federal income tax receivable to $ 11.4 million and $ 11.5 million on its condensed consolidated balance sheet as of June 30, 2024 and December 31, 2023, respectively.

The CARES Act allowed net operating losses (“NOLs ”) incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid federal income taxes.

We generated significant NOLs during 2018 and 2019, and have filed amended returns to carryback these losses for five years.

Accordingly, during 2020, we recorded a federal income tax receivable of $ 15.0 million and an increase to our deferred income tax liability of $ 10.1 million on our Condensed Consolidated Balance Sheet.

During the third quarter of 2020, we received refunds totaling $ 3.9 million related to our 2018 NOLs, which reduced our federal income tax receivable to $ 11.4 million and $ 11.5 million on our Condensed Consolidated Balance Sheet as of September 30, 2024 and December 31, 2023, respectively.

Rental Equipment

Our rental equipment and associated accumulated depreciation as of June 30, 2024 and December 31, 2023, respectively, consisted of the following:

June 30, 2024 December 31, 2023

Our rental equipment and associated accumulated depreciation consisted of the following, as of the dates presented:

September 30, 2024 December 31, 2023

(in thousands)

1 unchanged sentence

Work-in-process 55,008 50,867

Rental equipment 592,963 565,394

619,602 565,394

Accumulated depreciation ( 211,841 ) ( 191,745 )

Rental equipment, net of accumulated depreciation $ 388,331 $ 373,649

We evaluated our rental equipment for potential material impairment as of June 30, 2024, and determined that an immaterial impairm ent of less than $ 0.1 million existed as of that date.

$ 407,761 $ 373,649

We evaluated our rental equipment for potential impairments as of September 30, 2024, and December 31, 2023 and determined that none were present.

Long-term Debt

Our long-term debt consists of the following:

June 30, 2024 December 31, 2023

Our outstanding long-term debt consists of the following, as of the dates presented:

September 30, 2024 December 31, 2023

(in thousands)

Total long-term debt $ 163,000 $ 164,000

Credit facility borrowings $ 163,000 $ 164,000

Amended and Restated Credit Agreement

On May 11, 2021, we entered into a five-year senior secured revolving credit agreement ("Credit Agreement") with Texas Capital Bank, National Association (the "Lender") with an initial commitment of $ 20 million and an accordion feature that would increase the maximum commitment to $ 30 million, subject to collateral availability.

On December 12, 2022, we entered into a First Amendment to the Credit Agreement (the "First Amendment") to increase the maximum commitment to $ 30 million.

We also have a right to request from the Lender, on an uncommitted basis, an increase of up to $ 30 million on the aggregate commitment;

provided, however, the aggregate commitment amount is not permitted to exceed $ 50 million.

The maturity date of the Credit Agreement was May 11, 2026.

The obligations under the Credit Agreement were secured by a first priority lien on a variety of our assets, including inventory and accounts receivable as well as a variable number of our leased compressor equipment.

On February 28, 2023, we replaced our prior credit agreement by entering into a five-year senior secured revolving credit agreement (“Amended and Restated Credit Agreement”) with the Lender, as administrative agent, TCBI Securities, Inc., as joint lead arranger and sole book runner and Bank of America, N.A., as joint lead arranger, with an initial commitment of $ 175 million as of the closing date.

Subject to collateral availability, we also have a right to request from the Lender, on an uncommitted basis, an increase of up to $ 125 million on the aggregate commitment;

provided, however, the aggregate commitment amount is not permitted to exceed $ 300 million.

On February 28, 2023, we entered into a five-year senior secured revolving credit agreement (“Amended and Restated Credit Agreement”) with the Texas Capital Bank, National Association (the “Lender ” ), as administrative agent, TCBI Securities, Inc., as joint lead arranger and sole book runner and Bank of America, N.A., as joint lead arranger, with an initial commitment of $ 175.0 million as of the closing date.

The maturity date of the Amended and Restated Credit Agreement is February 28, 2028.

The obligations under the Amended and Restated Credit Agreement are secured by a first priority lien on most of our assets, including inventory and accounts receivable as well as a variable number of our leased

compressor equipment.

In connection with the amendment we agreed to pay fees of $ 2.0 million (representing fees equal to 1.39 % of the $ 145 million increase in the commitment) and reimburse the lenders for their expenses.

On November 14, 2023, the Company entered into a First Amendment to the Amended and Restated Credit Agreement (the "Amendment") with the Lender, as administrative agent and certain other lenders to (i) increase the lender commitment from $ 175 million to $ 225 million, and (ii) to add First-Citizens Bank & Trust Company as a new lender to the facility.

In connection with the Amendment, we agreed to pay fees of $ 0.6 million (representing fees equal to 1.125 % of the $ 50 million increase in the commitment) and reimburse the lenders for their expenses.

On June 6, 2024, the Company entered into a Second Amendment to the Amended and Restated Credit Agreement (the "Second Amendment") with the Lender and certain other lenders primarily to (i) increase the aggregate lender commitment from $ 225 million to $ 300 million, (ii) revise the leverage ratio covenant (as more fully describe below) and (iii) to add Zions Bancorporation, N.A.

(dba Amegy Bank) as a new lender to under the facility.

The Company also agreed to fees of $ 0.9 million (representing 1.125 % of the $ 75 million increase in the commitment) and reimburse the lenders for their expenses.

On June 25, 2024, the Company entered into a Third Amendment to the Amended and Restated Credit Agreement (the "Third Amendment") with the Lender, as administrative agent and the lenders thereto to increase the potential aggregate commitment of the existing credit facility from $ 300 million to $ 350 million.

In connection with the closing of the Amended and Restated Credit Agreement, we incurred fees of $ 2.0 million (representing fees equal to 1.39 % of the $ 145.0 million increase in the commitment from the previous credit agreement) and reimbursed the lenders for their expenses.

On November 14, 2023, we entered into a First Amendment to the Amended and Restated Credit Agreement (the “Amendment”) with the Lender, as administrative agent and certain other lenders to (i) increase the lender commitment from $ 175.0 million to $ 225.0 million, and (ii) to add First-Citizens Bank & Trust Company as a new lender to the facility.

In connection with the Amendment, we incurred fees of $ 0.6 million (representing fees equal to 1.125 % of the $ 50.0 million increase in the commitment) and reimbursed the lenders for their expenses.

On June 6, 2024, we entered into a Second Amendment to the Amended and Restated Credit Agreement (the “Second Amendment”) with the Lender and certain other lenders primarily to (i) increase the aggregate lender commitment from $ 225.0 million to $ 300.0 million, (ii) revise the leverage ratio covenant (as more fully describe below) and (iii) to add Zions Bancorporation, N.A.

(dba Amegy Bank) as a new lender to the facility.

In connection with the Second Amendment, we incurred fees of $ 0.9 million (representing 1.125 % of the $ 75.0 million increase in the commitment) and reimbursed the lenders for their expenses.

On June 25, 2024, we entered into a Third Amendment to the Amended and Restated Credit Agreement (the “Third Amendment”) with the Lender, as administrative agent and the lenders thereto to increase the potential aggregate commitment of the existing credit facility from $ 300.0 million to $ 350.0 million.

Under the Third Amendment, the Company has a right to request from the Lender, on an uncommitted basis, an increase of up to $ 50.0 million on the aggregate commitment;

provided, however, the aggregate commitment amount is not permitted to exceed $ 350.0 million.

We also agreed to reimburse the lenders for their expenses.

As of June 30, 2024, we were in compliance with all financial covenants in our Amended and Restated Credit Agreement.

As of June 30, 2024, we had approximately $ 163 million outstanding under our Amended and Restated Credit Agreement with a weighted average interest rate of 8.93 %.

At June 30, 2024, we had approximately $ 119.7 million available for borrowing under the Amended and Restated Credit Agreement, subject to borrowing base determination.

In connection with the Third Amendment, we reimbursed the lenders for their expenses.

As of September 30, 2024, we had $ 163.0 million outstanding under our Amended and Restated Credit Agreement with a weighted average interest rate of 8.82 %.

At September 30, 2024, we had approximately $ 131.1 million available for borrowing under the Amended and Restated Credit Agreement, subject to borrowing base determination.

As of September 30, 2024, we were in compliance with all financial covenants in our Amended and Restated Credit Agreement.

Borrowing Base .

At any time before the maturity of the Amended and Restated Credit Agreement, we may draw, repay and re-borrow amounts available under the borrowing base up to the maximum aggregate availability discussed above.

Generally, the borrowing base equals the sum of (a) 85 % of eligible accounts receivable owed to the Company, plus (b) 50 % of the eligible inventory, valued at the lower of cost or market value at such time, subject to a cap of this component not to exceed $ 2.5 million, plus (c) the lesser of (i) 95 % of the net book value of the compressors that the Lender has determined are eligible for the extension of credit, valued at the lower of cost or market value with depreciation not to exceed 25 years, at such time and (ii) 80 % of the net liquidation value percentage of the net book value of the eligible compressors that the Lender has determined are eligible for the extension of credit, valued at the lower of cost or market value with depreciation not to exceed 25 years, at such time, plus (d) 80 % of the net book value, valued at the lower of cost (excluding any costs for capitalized interest or other noncash capitalized costs) or market of the eligible new compressor fleet, minus (e) any required availability reserves determined by the Lender in its sole discretion.

Generally, the borrowing base equals the sum of (a) 85 % of eligible accounts receivable owed to us, plus (b) 50 % of the eligible inventory, valued at the lower of cost or market value at such time, subject to a cap of this component not to exceed $ 2.5 million, plus (c) the lesser of (i) 95 % of the net book value of the compressors that the Lender has determined are eligible for the extension of credit, valued at the lower of cost or market value with depreciation not to exceed 25 years, at such time and (ii) 80 % of the net liquidation value percentage of the net book value of the eligible compressors that the Lender has determined are eligible for the extension of credit, valued at the lower of cost or market value with depreciation not to exceed 25 years, at such time, plus (d) 80 % of the net book value, valued at the lower of cost (excluding any costs for capitalized interest or other noncash capitalized costs) or market of the eligible new compressor fleet, minus (e) any required availability reserves determined by the Lender in its sole discretion.

The Lender may adjust the borrowing base components if material deviations in the collateral are discovered in future audits of the collateral.

Interest and Fees.

Under the terms of the Amended and Restated Credit Agreement, we have the option of selecting the applicable variable rate for each revolving loan, or portion thereof, of either (a) the Base Rate (as defined below) plus the Applicable Margin, or (b) in the case of a Term SOFR (“Secured Overnight Financing Rate”) Loan, the Adjusted Term SOFR rate plus the Applicable Margin.

Under the terms of the Amended and Restated Credit Agreement, we have the option of selecting the applicable variable rate for each revolving loan, or portion thereof, of either (a) the Base Rate (as defined below) plus the Applicable Margin, or (b) in the case of a Term Secured Overnight Financing Rate (“SOFR”) Loan, the Adjusted Term SOFR rate plus the Applicable Margin.

“Base Rate” means, for any day, a rate of interest per annum equal to the highest of (a) the prime rate for such day;

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or change the nature of our business.

2025, (c) 3.50 to 1.00 for the fiscal quarters ending September 30, 2025, December 31, 2025 and March 31, 2026 and (d) 3.25 to 1.00 for the fiscal quarter ending June 30, 2026 and for each fiscal quarter thereafter and (ii) a fixed charge coverage ratio greater than or equal to 1.25 to 1.00 as of the last day of each fiscal quarter.

As of June 30, 2024, the Company is in compliance with these covenants.

In addition, we are subject to certain financial covenants in the Amended and Restated Credit Agreement that require us to maintain (i) a leverage ratio, as defined, lesser than or equal to (a) 3.50 to 1.00 as of the last day of each fiscal quarter ending on or prior to December 31, 2024, (b) 3.75 to 1.00 for the fiscal quarters ending on March 31, 2025 and June 30, 2025, (c) 3.50 to 1.00 for the fiscal quarters ending September 30, 2025, December 31, 2025 and March 31, 2026 and (d) 3.25 to 1.00 for the fiscal quarter ending June 30, 2026 and for each fiscal quarter thereafter and (ii) a fixed charge coverage ratio greater than or equal to 1.25 to 1.00 as of the last day of each fiscal quarter.

Events of Default and Acceleration .

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Stock-Based and Other Long-Term Incentive Compensation

Stock Options

A summary of all option activity as of December 31, 2023, and changes during the six months ended June 30, 2024 is presented below:

1998 Stock Option Plan

After consideration of the activity described in the table below, a total of 405,919 shares remained available for grant under the 1998 Stock Option Plan (the “Stock Option Plan” ) as of September 30, 2024.

The last date that grants can be made under the Stock Option Plan is February 28, 2026.

A summary of all option activity during the nine months ended September 30, 2024 is presented below:

Number of Shares Underlying

5 unchanged sentences

Granted 46,000 $ 22.95 $ —

Cancelled / Forfeited ( 667 ) $ 10.58 — $ 3

Exercised ( 6,667 ) $ 10.58 $ 80

Canceled / Forfeited ( 7,167 ) $ 23.27 $ 3

( 29,667 ) $ 30.41 $ —

Outstanding, June 30, 2024 143,417 19.37 6.30 $ 476

Exercisable, June 30, 2024 77,584 $ 19.73 3.81 $ 268

The following table summarizes information about our stock options outstanding at June 30, 2024:

Outstanding, September 30, 2024 132,250 $ 19.56 6.15 $ 368

Exercisable, September 30, 2024 69,417 $ 19.86 3.56 $ 208

The following table summarizes information about our stock options outstanding as of September 30, 2024:

Range of Exercise Prices

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132,250 6.15 $ 19.56 69,417 $ 19.86

The following table summarizes changes in our unvested stock options for the six months ended June 30, 2024:

The following table summarizes changes in our unvested stock options during the nine months ended September 30, 2024:

Unvested Stock Options:

Shares Weighted Average Grant Date Fair Value Per Share

Unvested at December 31, 2023

Unvested, December 31, 2023

24,335 $ 5.45

Granted 46,000 $ 12.37

Vested, outstanding shares ( 2,502 ) $ 6.57

Cancelled/Forfeited — $ —

Unvested at June 30, 2024

( 5,502 ) $ 5.97

As of June 30, 2024, there was $ 0.4 million of unrecognized compensation cost related to unvested options.

For the six months and three months ended June 30, 2024, there was less than $ 0.1 million of compensation expense for stock options, respectively.

For the six months and three months ended June 30, 2023, there was less than $ 0.1 million of compensation expense for stock options.

Restricted Shares/Units and Performance Share Units

The following summarizes grants made of equity awards under our 2019 Equity Incentive Plan, as amended, on the dates indicated:

• On April 25, 2023, the Compensation Committee awarded 27,840 shares of restricted stock units to James R.

Hazlett, our Chief Technical Officer, that vest ratably over three years , beginning on April 25, 2024.

• Pursuant to the Retirement Agreement dated May 17, 2022, between the Company and Stephen.

Taylor, on April 25, 2023, the Compensation Committee awarded 58,790 fully vested shares of common stock to Mr.

• On May 9, 2023, the Compensation Committee awarded each of our four independent Board members 9,470 restricted stock units ("RSU").

These RSUs vest one year from the date of grant.

With respect to the 9,470 share RSU award received by Justin Jacobs, at the time of grant, he was an employee of Mill Road Capital Management, LLC (“Mill Road”), and was serving on our Board pursuant to a right of appointment held by Mill Road in connection with a Cooperation Agreement between Mill Road and us.

Pursuant to a pre-existing contractual obligation, Mill Road has the right to receive the economic benefit of the shares upon vesting of this RSU.

On January 29, 2024, Mr.

Jacobs terminated his employment with Mill Road and on February 12, 2024, he began employment as our permanent Chief Executive Officer.

As a result, since he no longer qualified as an independent member of our Board, Mr.

Jacobs relinquished the vesting of 2,252 shares representing the pro-rata number of shares allocable under the award since the beginning his employment in February.

Thus, these shares have not been issued and remain in our 2019 Plan for future award grants.

In connection with the contractual obligation noted above, 6,856 of the vested shares are in the process of being transferred by Mr.

Jacobs to Mill Road for no consideration, and Mr.

Jacobs continues to own 362 of the vested shares relating the period between his termination of employment with Mill Road and employment as our CEO.

• On June 30, 2023, Mr.

Taylor, in connection with his agreement to continue as our Interim Chief Executive Officer while we finalized our permanent CEO search, was granted RSUs for 10,101 shares of common stock that vested on June 30, 2024.

In addition, Mr.

Taylor was also issued 10,101 shares of common stock pursuant to his Retirement Agreement.

• On October 8, 2023, the Compensation Committee awarded 6,361 restricted stock units to Brian Tucker, our Chief Operating Officer.

These units will vest ratably over three years beginning on October 9, 2024.

• On October 26, 2023, the compensation committee awarded 4,623 restricted stock units to Georganne Hodges upon her appointment as an independent director.

These units vest one year from the date of the grant.

• On January 29, 2024, the compensation committee awarded Mr.

Jacobs, our Chief Executive Officer, 31,382 restricted stock units and two performance share unit ("PSU") awards, one for 6,494 shares representing a signing bonus and another for 31,382 shares representing an award for 2024 (pro-rated).

The restricted stock units vest over three years in equal tranches beginning on the one-year anniversary of the grant date.

Canceled/Forfeited ( 2,000 ) $ 12.46

Unvested, September 30, 2024

62,833 $ 10.25

As of September 30, 2024, there was $ 0.4 million of unrecognized compensation cost related to unvested options.

For each of the three and nine months ended September 30, 2024 and 2023, there was approximately $ 0.1 million of compensation expense for stock options, respectively.

2019 Equity Incentive Plan

The 2019 Equity Incentive Plan, as amended (the “Equity Incentive Plan” ), as approved by our shareholders, provides for up to 1,150,000 shares of common stock for issuance in the form of awards.

After consideration of the activity described in detail below, a total of 278,113 shares remained available for grant under the Equity Incentive Plan as of September 30, 2024.

The following summarizes grants of certain awards made under our Equity Incentive Plan during 2024:

• On January 29, 2024, the Compensation Committee awarded Justin Jacobs, our Chief Executive Officer (“CEO”) , 31,382 time-vested restricted stock units (“RSUs ”) and two performance share unit (“PSUs ” ) awards, one for 6,494 shares representing a signing bonus and another for 31,382 shares representing an award for 2024 (pro-rated).

The RSU awards vest over three years in equal tranches beginning on the one-year anniversary of the grant date.

• On March 4, 2024, the Compensation Committee awarded Brian Tucker, our Chief Operating Officer (“COO”) , 11,293 time-vested RSUs and 11,293 PSUs.

The RSU awards vest over three years in equal tranches beginning on the one-year anniversary of the grant date.

• On March 14, 2024, the Compensation Committee awarded Mr.

Tucker our Chief Operating Officer 11,293 restricted stock units and 11,293 performance share units.

These restricted stock units vest over three years in equal tranches beginning on the one-year anniversary of the grant date.

• In addition on March 14, 2024, the compensation committee awarded Mr.

Hazlett, our Chief Technical Officer, 21,984 restricted stock units.

These restricted stock units vest over three years in equal tranches beginning on the one-year anniversary of the grant date.

Hazlett, our Chief Technical Officer, 21,984 time-vested RSUs.

These RSUs were to vest over three years in equal tranches beginning on the one-year anniversary of the grant date.

In connection with Mr.

Hazlett ’ s recent retirement on August 1, 2024, we adjusted the vesting terms of the RSUs to correspond with the term of his post-retirement consulting agreement.

• On June 13, 2024, the Compensation Committee awarded each of our four independent Board members 5,620 RSUs.

These RSUs vest 1 year from the date of grant.

In connection with the performance share unit awards granted to Messrs.

Jacobs and Tucker set forth above, potential payout for the PSU award is based upon performance for a three-year period ending December 31, 2026 measured against relative total shareholder return (“TSR”) compared to a peer group as established by the Compensation Committee.

The PSU award payout ranges from zero (if the Company ranks below the 30th percentile) and up to 200 % for Mr.

Jacobs and Mr.

Tucker, the CEO and the Chief Operating Officer, respectively, (if the Company ranks first) based upon the Company’s relative TSR performance ranking (subject to certain caps based on absolute TSR).

Total compensation expense related to these and previously granted restricted stock awards was $ 0.4 million and $ 1.6 million for the six months ended June 30, 2024, and 2023, respectively.

Total compensation expense related to these and previously granted restricted stock awards was $ 0.2 million and $ 1.1 million for the three months ended June 30, 2024 and 2023, respectively.

A summary of all restricted stock/units outstanding as of December 31, 2023 and activity during the six months ended June 30, 2024 is presented below:

• On May 7, 2024 and July 9, 2024 the Compensation Committee awarded certain non-executive employees a combined total of 10,616 time-vested RSUs.

These RSUs vest over three years in equal tranches beginning on the one-year anniversary of the grant date.

• On June 13, 2024, the Compensation Committee awarded each of our four independent Board members a total 5,620 RSUs, or a total of 22,480 RSUs.

One half of these awards, or 11,240 in total, will vest one year from the date of grant and will be settled in shares of common stock.

The other 11,240 awards will vest one year from the date of grant and can be settled, at the discretion of the recipients, in cash or shares of common stock.

• On September 13, 2024, the Compensation Committee awarded Stephen Taylor, our current Chairman of the Board, a total of 4,195 RSUs for his current Board service, of which 2,098 will vest one year from the date of grant and will be settled in shares of common stock and 2,097 awards will vest one year from the date of grant and can be settled, at the discretion of Mr.

Taylor, in cash or shares of common stock.

Performance Share Units

In connection with the PSUs granted to our CEO and COO as set forth above, potential payout for the PSU award is based upon performance for a three-year period ending December 31, 2026 measured against relative total shareholder return (“TSR”) compared to a peer group of 16 companies as established by the Compensation Committee.

The PSU award payout ranges from zero (if the Company ranks below the 31.25 percentile) and up to 200 % (if the Company ranks first) based upon our relative TSR performance ranking (subject to certain caps based on absolute TSR).

With respect to vesting, the PSUs have both a service condition and a market condition.

Due to the presence of the TSR measurement for the common equity of 17 companies, including NGS common stock, which is deemed a “market condition”, the grant-date fair value of the PSUs must be determined using a binomial pricing model.

The grant date fair values of $ 19.59 per unit and $ 22.48 per unit for the PSUs awarded to the CEO and COO, respectively, were derived by using a Monte Carlo simulation model.

The ranges for the assumptions used in the model for the PSUs are presented as follows:

(i) expected volatility - 43.4 % to 43.8 %, (ii) dividend yield - 0 % and (iii) risk-free interest rates - 4.09 % to 4.39 %.

The compensation expense associated with the PSUs, similar to stock options, will be recognized over the vesting term of three years whether or not the settlement results in the payout of shares.

Cash Settled RSUs

The 2024 grant of RSUs to the independent Board members and Mr.

Taylor that can be settled in cash represent liability-classified awards.

Compensation expense associated with these awards is based upon the fair value of NGS common stock at each reporting period relative to that portion of the service period that has passed.

Accordingly, the compensation expense is variable in nature.

Time-Vested RSUs

A summary of all time-vested RSU activity during the nine months ended September 30, 2024 is presented below:

Shares Weighted Average

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( 23,399 ) $ 11.07 $ 217

Outstanding, June 30, 2024 143,540 $ 14.82 5.13 $ 2,888

Outstanding, September 30, 2024 129,288 $ 15.68 4.96 $ 2,471

Total compensation expense related to these and previously granted awards under the Equity Incentive Plan was $ 0.5 million and $ 0.2 million for the three months ended September 30, 2024, and 2023, respectively, and $ 0.9 million and $ 1.8 million for the nine months ended September 30, 2024 and 2023, respectively.

Earnings per Share

The following table reconciles the numerators and denominators of the basic and diluted earnings per share computation :

Three months ended Six months ended

June 30, June 30,

The following table reconciles the numerators and denominators of the basic and diluted earnings per share computation for the periods presented :

Three months ended Nine months ended

September 30, September 30,

2024 2023 2024 2023

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Weighted average common shares outstanding 12,427 12,378 12,404 12,295

Dilutive effect of stock options and restricted stock/units 99 102 92 121

Dilutive effect of stock options, RSUs and PSUs

Diluted weighted average shares 12,526 12,403 12,511 12,372

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Commitments and Contingencies

From time to time, we are a party to various legal proceedings in the ordinary course of our business.

From time to time, we are a party to various claims and legal proceedings arising from our operations in the ordinary course of business.

We are not currently a party to any material legal proceedings, and we are not aware of any threatened material litigation.

The Company believes it maintains adequate insurance coverage against any potential litigation loss relating to insurable risks.

While the outcome of any claims and legal proceedings against us cannot be predicted with certainty, we have concluded that it is not considered reasonably possible that a loss resulting from such claims or proceedings in excess of any amounts accrued has been incurred that is expected to have a material adverse effect on our financial condition, results of operations or cash flows.

Furthermore, we believe that we maintain adequate insurance coverage against any potential litigation loss relating to insurable risks.

Subsequent Events

In accordance with ASC 855 - Subsequent Events - the Company has evaluated all events subsequent to the balance sheet date as of June 30, 2024 through the date this report was issued and believes nothing is required to be reported thereunder.

We have evaluated all events subsequent to the balance sheet date as of September 30, 2024 and through the date this report was issued and determined that there have been no events that would require adjustments or additional disclosures to our Condensed Consolidated Financial Statements.

Special Note Regarding Forward-Looking Statements

This report and our Annual Report on Form 10-K for the year ended December 31, 2023 (the “Annual Report”) filed with the Securities and Exchange Commission (“SEC”) contain certain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, and information pertaining to us, our industry and the oil and natural gas industry that is based on the beliefs of our management, as well as assumptions made by and information currently available to our management.

All statements, other than statements of historical facts contained in this report as well as our Annual Report, including statements regarding our future financial position, growth strategy, budgets, projected costs, plans and objectives of management for future operations, are forward-looking statements.

We use the words “may,” “will,” “expect,” “anticipate,” “estimate,” “believe,” “continue,” “intend,” “plan,” “budget” and other similar words to identify forward-looking statements.

You should read statements that contain these words carefully and should not place undue reliance on these statements because they discuss future expectations, contain projections of results of operations or of our financial condition and/or state other “forward-looking” information.

We do not undertake any obligation to update or revise publicly any forward-looking statements.

Although we believe our expectations reflected in these forward-looking statements are based on reasonable assumptions, no assurance can be given that these expectations or assumptions will prove to have been correct.

Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Those risks include, but are not limited to, (i) achieving increased utilization of assets, including rental fleet utilization and monetizing other non-cash balance sheet assets;

(ii) failure of projected organic growth due to adverse changes in the oil and gas industry, including depressed oil and gas prices, oppressive environmental regulations and competition;

(iii) inability to finance capital expenditures;

(iv) adverse changes in customer, employee or supplier relationships;

(v) adverse regional and national economic and financial market conditions, including in our key operating areas;

(vi) impacts of world events, including pandemics;

the financial condition of the Company’s customers and failure of significant customers to perform their contractual obligations;

(vii) our ability to economically develop and deploy new technologies and services, including technology to comply with health and environmental laws and regulations;

(viii) failure to achieve accretive financial results in connection with any acquisitions we may make (ix) the loss of market share through competition or otherwise, including the introduction of competing technologies by other companies;

and (x) prolonged, substantial reduction in oil and natural gas prices, which could cause a decline in the demand for our products and services.

The forward-looking statements included in this Form 10-Q are only made as of the date of this report, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

A discussion of these and other risk factors is included in our Annual Report filed with the SEC.

Please read Item 1A, Risk Factors, in our Annual Report, as it contains important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements