What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-11 compared with 2025-05-12 · 85 added, 70 removed, 267 unchanged (37% of the section changed)

1 unchanged sentence

The discussion and analysis of the financial condition and results of operations of Natural Gas Services Group, Inc.

(the “Company”, “NGS”, “Natural Gas Services Group”, “we,” “us” or “our”) for the periods ended March 31, 2025, and 2024 are based on, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the related notes included elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2024.

(the “Company”, “NGS”, “Natural Gas Services Group”, “we,” “us” or “our”) for the periods ended June 30, 2025, and 2024 are based on, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the related notes included elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2024.

The following discussion contains forward-looking statements that include risks and uncertainties.

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All dollar amounts presented in the tables that follow are in thousands unless otherwise indicated.

References to “quarters” represent the three months ended March 31, 2025, or 2024, as applicable.

References to “quarters” represent the three months ended June 30, 2025, or 2024, as applicable.

Certain variances that represent results that are not meaningful are indicated as “NM.”

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Our primary focus is on the rental of natural gas and electric compressors.

Our rental contracts generally provide for initial terms of six to 60 months, with our larger horsepower units having longer initial terms than our small and medium horsepower units.

Our rental contracts generally provide for initial terms of 12 to 60 months, with our larger horsepower units having longer initial terms than our small and medium horsepower units.

After the initial term of our rental contracts, most of our customers have continued to rent our compressors on a month-to-month basis.

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The following table summarizes our key operating statistics as of the dates or for the periods presented, as applicable:

Three months ended June 30, Six months ended June 30,

2025 2024 2025 2024

Rented horsepower (at period end) 498,651 454,568 498,651 454,568

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Fleet units (at period end):

1,833 1,899 1,833 1,899

Unit utilization (at period end) 65.4 % 65.4 % 65.4 % 65.4 %

2 unchanged sentences

Rental revenues as a percent of total revenues 95.6 % 90.7 % 94.8 % 91.1 %

Of the total horsepower utilized as of March 31, 2025, 382,192 of horsepower was being rented under contracts expiring between 2025 and 2030 and 110,487 of horsepower was being rented on a month-to-month basis.

Of the total horsepower utilized as of June 30, 2025, 391,785 of horsepower was being rented under contracts expiring between 2025 and 2030 and 106,866 of horsepower was being rented on a month-to-month basis.

Our Performance Trends and Outlook

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The market for compression equipment and services is highly dependent on the production levels of exploration and production companies and pricing of oil and gas.

The level of production for crude oil activity and capital expenditures has generally been dependent upon the prevailing view of future crude oil prices, which are influenced by numerous supply and demand factors, including availability and cost of capital, well productivity and development costs, global and domestic economic conditions, environmental regulations, policies of OPEC and Russia, and other factors.

The level of production for crude oil activity and capital expenditures has generally been dependent upon the prevailing view of future crude oil prices, which is influenced by numerous supply and demand factors, including availability and cost of capital, well productivity and development costs, global and domestic economic conditions, environmental regulations, policies of OPEC and Russia, and other factors.

While crude oil prices have historically been volatile, we expect demand for our existing compressor fleet to remain positive assuming crude oil prices remain within reasonable bands with respect to current pricing levels.

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The following table calculates our gross margin, the most directly comparable GAAP financial measure, and reconciles it to Adjusted Gross Margin with further detail by revenue classification for the periods presented:

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2025 2024 2025 2024

Total revenue $ 41,382 $ 38,491 $ 82,765 $ 75,398

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There are other material limitations to using Adjusted EBITDA as a measure of performance, including the inability to analyze the impact of certain recurring items that materially affect our net income or loss, and the lack of comparability of results of operations of different companies.

Please read the table below to see how Adjusted EBITDA reconciles to our net income, for the three months ended March 31, 2025, and 2024, the most directly comparable GAAP financial measure.

The following table reconciles our net income, the most directly comparable GAAP financial measure, to Adjusted EBITDA for the periods presented:

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2025 2024 2025 2024

Net income $ 5,188 $ 4,250 $ 10,042 $ 9,348

4 unchanged sentences

Retirement of rental equipment — — 728 5

Severance and restructuring charges 89 33 89 33

Stock-based compensation 579 242 938 516

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Results of Operations

Three months ended March 31, 2025, compared to the three months ended March 31, 2024.

Three and six months ended June 30, 2025, compared to the three and six months ended June 30, 2024.

We generate revenue primarily from renting, maintaining and servicing compressors to our customers under contractual arrangements.

These contracts, which all qualify as operating leases under GAAP, generally include a fee for servicing the compressor unit during the rental term.

Our rental contract terms typically range from six to 60 months.

Our rental contract terms typically range from 12 to 60 months.

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

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The following table summarizes the revenues, costs, adjusted gross margin and related operating statistics with respect to our rentals of compressors for the periods presented:

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2025 2024 Change % 2025 2024 Change %

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Customers under contract 63 73 (10) (13.7) % 63 73 (10) (13.7) %

Rental revenue increased for the three months ended March 31, 2025, as compared to the comparable period in 2024 due primarily to an increase in rented horsepower despite a decrease in the number of units rented and a decrease in total customers.

Rental revenue increased for the three and six months ended June 30, 2025, as compared to the corresponding periods in 2024 due primarily to an increase in rented horsepower despite a decrease in the number of units rented and a decrease in total customers.

The increase in revenue reflects a continuing trend of growing demand for our higher horsepower units (400 horsepower and greater) which provide for higher rental rates and realized adjusted gross margins.

Our utilized horsepower was relatively flat which reflects the continued addition of high horsepower compressor units to our fleet consistent with our emphasis on larger units over the past few years, offset by the return of lower horsepower units.

Our utilized horsepower increased marginally during the second quarter of 2025 as compared to the prior year period which reflects the continued addition of high horsepower compressor units to our fleet consistent with our emphasis on larger units over the past few years, as well as the retirement of certain older medium and small horsepower units from the fleet partially offset by the return of lower horsepower units to the fleet by certain customers at the end of their lease terms.

Through June 30, 2025, we placed into service a total 181 newly set units, including 166 from our existing fleet and 15 new units.

Of those sets, a total of 48 were high horsepower units and 15 of those were new units to the fleet.

The decline in customers is primarily attributable to E&P industry consolidation as well as the acquisition of existing producing oil and gas properties among E&P companies;

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The cost of rentals increased on an absolute basis due to the effects of supporting a larger quantity of utilized horsepower and inflationary pressures primarily in labor and parts costs.

As a result of these factors, our adjusted gross margin increased on both an absolute basis as well as a percentage of revenues for the three months ended March 31, 2025, compared to the comparable period in 2024.

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

An expanding portion of our rented compressor units utilize our proprietary System Management and Recovery Technology (“SMART”) and telemetry software which reduces unplanned shutdowns and increases productivity.

Despite inflationary pressure associated with our primary cost components, the SMART and telemetry technology allows us to streamline and manage our maintenance activities more efficiently and thereby mitigating the costs to a manageable extent.

As a result of these factors, our adjusted gross margin increased on both an absolute basis as well as a percentage of revenues for the three and six months ended June 30, 2025, compared to the comparable periods in 2024.

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

Costs of sales include purchases of engines, compressors, coolers and other component materials as well as direct and indirect labor attributable to the assembly of equipment to meet the unique specifications of our customers.

In addition, our costs of sales include overhead and related support costs attributable to our storage facilities, assembly, repair and overhaul facilities in Tulsa, Oklahoma as well as Midland, Texas through its closure at the end of March 2025.

In addition, our costs of sales include overhead and related support costs attributable to our storage, assembly, repair and overhaul facilities in Tulsa, Oklahoma as well as Midland, Texas through its closure at the end of March 2025.

The following table summarizes the revenues, costs and adjusted gross margin with respect to our sales of compressors, parts and equipment and repair/overhaul services for the periods presented:

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2025 2024 Change % 2025 2024 Change %

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Cost of sales (excluding depreciation and amortization) 911 2,249 (1,338) (59.5) % 2,927 4,429 (1,502) (33.9) %

Sales adjusted gross margin $ (89) $ 323 $ (412) NM

Sales adjusted gross margin $ (161) $ 21 $ (182) NM $ (250) $ 344 $ (594) NM

Sales adjusted gross margin percentage (21.5) % 0.9 % (22.4) % (9.3) % 7.2 % (16.5) %

Percent of total company revenues 1.8 % 5.9 % (4.1) % 3.2 % 6.3 % (3.1) %

Sales revenue declined for the three months ended March 31, 2025, compared to comparable period in 2024.

Sales revenue declined for the three and six months ended June 30, 2025, compared to the corresponding periods in 2024.

Sales are subject to fluctuations in the timing of industry activity related to our customers’ capital projects and, as such, can vary substantially between periods.

Due to these circumstances as well as the costs of maintaining support facilities relative to revenues, we continue to shift our business away from sales of new compressor packages to renting our owned units to our customers.

While the costs to support our sales revenues declined on an absolute basis, primarily reflecting a lower volume of business, the gross margin declined to a negative value due primarily to indirect labor and fixed overhead costs that are not otherwise subject to capitalization at our assembly, repair and overhaul facilities, primarily at the location in Midland, Texas which we closed at the end of March 2025.

While the costs to support our sales revenues declined on an absolute basis, primarily reflecting a lower volume of business, the gross margins declined to negative values due primarily to indirect labor and fixed overhead costs that are not otherwise subject to capitalization at our assembly, repair and overhaul facilities, as well as severance and other continuing costs primarily at the location in Midland, Texas which we closed at the end of March 2025.

Sales represented an insignificant portion of our gross margin in the three and six months ended June 30, 2025, and 2024, respectively.

Aftermarket Service

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The following table summarizes the revenues, costs and adjusted gross margin with respect to our aftermarket services for the periods presented:

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2025 2024 Change % 2025 2024 Change %

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Percent of total company revenues 2.5 % 3.4 % (0.9) % 1.9 % 2.6 % (0.7) %

Third party aftermarket services revenues and costs declined for the three months ended March 31, 2025, compared to comparable period during 2024.

The decline is primarily attributable to a lower volume of service call-out work performed during the 2025 period compared to 2024.

Aftermarket services only represented 1.3 percent and 1.8 percent of our revenue in the three months ended March 31, 2025, and 2024, respectively, providing minimal impact on our overall adjusted gross margin.

Third party aftermarket services revenues and costs declined for the three months ended June 30, 2025, compared to the corresponding periods during 2024;

however, the absolute gross margins and percentages both improved over the prior periods in 2024.

The decline in revenue and costs is primarily attributable to a marginally lower volume of unit commissioning work performed during the 2025 periods compared to 2024 as well as the effect of lower freight costs.

Aftermarket services represented an insignificant portion of our gross margin in the three and six months ended June 30, 2025, and 2024, respectively.

Selling, General and Administrative Expenses

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In addition, SG&A includes non-personnel costs, such as occupancy costs, IT support costs, professional fees and other supporting corporate expenses including public company compliance costs.

When applicable, SG&A expenses also includes severance benefits and related costs associated with exit activities and restructuring actions.

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2025 2024 Change % 2025 2024 Change %

Primary selling, general and administrative expenses $ 4,875 $ 4,778 $ 97 2.0 % $ 9,894 $ 9,206 $ 688 7.5 %

Stock-based compensation 359 274 85 31.0 %

Stock-based compensation - equity classified 579 242 337 139.3 % 938 516 422 81.8 %

Total $ 5,454 $ 5,020 $ 434 8.6 % $ 10,832 $ 9,722 $ 1,110 11.4 %

SG&A expenses as a percent of total revenues 13.2 % 13.0 % 0.2 % 13.1 % 12.9 % 0.2 %

SG&A expenses increased during the three months ended March 31, 2025, as compared to the comparable period in 2024.

SG&A expenses increased during the three and six months ended June 30, 2025, as compared to the corresponding periods in 2024.

In general, the increase in our total SG&A expenses reflects a higher level of cost to appropriately scale our administrative function.

The absolute dollar increase was primarily impacted by (i) higher salaries, benefits and commissions of $0.4 million reflecting support staff growth, (ii) higher stock-based compensation expense of $0.1 million primarily attributable grants made in the latter part of 2024, (iii) higher information technology support costs of $0.2 million in support of our growth initiatives.

The marginal increase in primary SG&A expenses during the three months ended June 30, 2025 as compared to 2024 reflects (i) higher information technology support costs of $0.2 million, (ii) higher public company costs of $0.1 million and (iii) higher occupancy and office costs of $0.1 million which were substantially offset by (i) lower credit loss expenses of $0.1 million, (ii) lower compensation costs of $0.1 million and (iii) lower professional fees of $0.1 million.

The increase in primary SG&A expenses during the six months ended June 30, 2025 compared to 2024 was impacted by (i) higher information technology support costs of $0.4 million in support of our growth initiatives, (ii) higher salaries and benefits of $0.2 million reflecting support staff growth (iii) higher public company costs of $0.1 million and (iv) marginally higher occupancy and office costs of $0.1 million.

These increases were partially offset by $0.1 million of lower professional fees and credit loss expense on a combined basis.

Our equity classified stock-based compensation increased during both periods in 2025 over 2024 due primarily to a higher mix of performance-based share unit awards, or PSUs, for our executive officers in the 2025 period.

PSUs generally have a higher grant-date fair value than traditional restricted stock and restricted stock units.

Depreciation and Amortization

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The following table summarizes the components of our depreciation and amortization expenses for the periods presented:

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2025 2024 Change % 2025 2024 Change %

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Corporate depreciation 96 98 (2) (2.0) % 193 218 (25) (11.5) %

Intangible asset amortization — 31 (31) NM

Intangible asset amortization — 35 (35) NM — 66 (66) NM

Total $ 8,969 $ 7,705 $ 1,264 16.4 % $ 17,605 $ 14,792 $ 2,813 19.0 %

Depreciation and amortization as a percent of total revenues 21.7 % 20.0 % 1.7 % 21.3 % 19.6 % 1.7 %

Depreciation and amortization expense increased for the three months ended March 31, 2025, as compared to the comparable period in 2024, due primarily to depreciation expense associated with the high horsepower units placed in service during 2024.

The three months ended March 31, 2025 reflects the continuing expansion of the high horsepower fleet while the comparable period in 2024 reflects fewer high horsepower units in our fleet as the expansion was in its earlier stages.

Depreciation and amortization expense increased for the three and six months ended June 30, 2025, as compared to the corresponding periods in 2024, due primarily to depreciation expense associated with the high horsepower units placed in service during the second half of 2024 continuing through June 30, 2025.

These higher horsepower unit additions, which began in earnest during 2023, are reflective of our strategic plans to concentrate our business development on these higher margin applications.

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The following table indicates the charges incurred for inventory allowance for the periods presented:

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2025 2024 Change % 2025 2024 Change %

Inventory allowance $ 61 $ — $ 61 NM

Inventory allowance $ — $ — $ — NM $ 61 $ — $ 61 NM

During three months ended March 31, 2025 , we recorded a nominal increase to the allowance for obsolescence primarily attributable to the transfer of inventory that remains useful from our former Midland, Texas facility, in connection with its closing in March 2025, to our other operating facilities.

All of remaining inventory from the Midland, Texas facility that was subject to the allowance for obsolescence was written off during the three months ended March 31, 2025.

As of March 31, 2025, we had an inventory obsolescence balance of $2.5 million as compared to $5.9 million as of December 31, 2024.

As of June 30, 2025, we had an inventory obsolescence balance of $2.5 million as compared to $5.9 million as of December 31, 2024.

Please see Note 4 ( “ Inventory ” ) to our Condensed Consolidated Financial Statements for additional information regarding the inventory allowance.

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The following table indicates the charges incurred for the retirement of rental equipment for the periods presented:

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2025 2024 Change % 2025 2024 Change %

Retirement of rental equipment $ 728 $ 5 $ 723 NM

We retired certain small and medium horsepower compressor units during the three months ended March 31, 2025 .

Such retirements were minimal during the comparable period during 2024.

Retirement of rental equipment $ — $ — $ — NM $ 728 $ 5 $ 723 NM

We retired certain small and medium horsepower compressor units during the six months ended June 30, 2025 with only those units retired during the three months ended March 31, 2025 and 2024 having any remaining carrying value .

Such retirements were minimal during the comparable periods during 2024.

Gain on the Sale of Assets

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The following table presents the gains recognized upon the sale of assets for the periods presented:

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2025 2024 Change % 2025 2024 Change %

Gain on the sale of assets, net $ 54 $ — $ 54 NM

Gains recognized during the three months ended March 31, 2025 are primarily attributable to the sales of trucks after the completion of their useful lives.

Gain on the disposition of assets, net $ 124 $ 229 $ (105) NM $ 178 $ 229 $ (51) NM

Gains recognized during the three and six months ended June 30, 2025 are primarily attributable to the sales of trucks after the completion of their useful lives.

Interest Expense

Interest expense primarily reflects the costs of borrowing, including commitment fees and the amortization of debt issue costs, under our Credit Facility, net of amounts capitalized attributable to certain capital projects.

Also included is interest expense on our financing leases.

Three months ended March 31,

Interest expense primarily reflects the costs of borrowing, including commitment fees and the amortization of debt issue costs, under our senior secured revolving credit agreement, as amended (the “Credit Facility”) , net of amounts capitalized attributable to certain capital projects.

Also included is interest expense on our financing leases during the 2024 periods as all were settled before 2025.

The following table presents the components of our interest expense for the periods presented:

Three months ended June 30, Six months ended June 30,

2025 2024 Change % 2025 2024 Change %

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Weighted-average outstanding borrowings $ 175,427 $ 169,839 $ 5,588 $ 172,867 $ 168,790 $ 4,077

Interest expense increased for the three months ended March 31, 2025, as compared to the comparable period in 2024, due primarily to the effect of $0.6 million of lower capitalized interest due primarily to the timing of completion of certain projects in the 2025 period.

Amortization of debt issue costs increased marginally during the three months ended March 31, 2025, as compared to the comparable period in 2024 due primarily to the amortization of costs associated with certain amendments to the Credit Facility that took place in June of 2024.

While average borrowings outstanding under our Credit Facility were relatively flat during the three months ended March 31, 2025, as compared to the comparable period in 2024, we experienced lower average interest rates consistent with the Federal Reserve interest rate reductions implemented in the second half of 2024.

Interest expense increased for the three and six months ended June 30, 2025, as compared to the corresponding periods in 2024 , due primarily to the effect of $0.8 million and $1.3 million lower capitalized interest, respectively, due primarily to the volume and timing of the completion of certain compressor assembly projects in the 2025 periods.

In addition, amortization of debt issue costs increased during the three and six months ended June 30, 2025, as compared to the comparable periods in 2024 due primarily to the amortization of costs associated with certain amendments to the Credit Facility that took place in June of 2024 as well as the the Fourth Amendment to the Amended and Restated Credit Agreement (the “Fourth Amendment”) that was completed in April 2025.

While the average borrowings outstanding under our Credit Facility have increased during the three and six months ended June 30, 2025, as compared to the comparable periods in 2024, we experienced lower average interest rates consistent with the Federal Reserve interest rate reductions implemented in the second half of 2024 as well as the lower interest rates attributable to the Fourth Amendment.

Other Income (Expense), net

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The following table indicates our other income (expense) for the periods presented:

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2025 2024 Change % 2025 2024 Change %

Other income (expense), net $ (1) $ 193 $ (194) NM

Other income (expense), net declined for the three months ended March 31, 2025, as compared to the comparable period in 2024, due primarily to higher unrealized losses attributable to our COLI policies associated with our deferred compensation plan .

Other income (expense), net $ 104 $ (30) $ 134 NM $ 103 $ 163 $ (60) NM

Other income (expense), net improved for the three months ended June 30, 2025 as compared to the corresponding period in 2024 due primarily to certain non-operating credits and unrealized gains attributable to our COLI policies associated with our deferred compensation plan while the six months ended June 30, 2025 declined as compared to the comparable period in 2024, due primarily to higher unrealized gains attributable to our COLI policies in the 2024 period.

Provision for Income Taxes

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The following table summarizes our income tax provision for the periods presented:

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2025 2024 Change % 2025 2024 Change %

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Our primary sources of liquidity include cash provided by operating activities and borrowings under our Credit Facility.

On April 18, 2025, we entered into the Fourth Amendment to the Amended and Restated Credit Agreement (the “Fourth Amendment”).

The Fourth Amendment provides us with up to $400.0 million in borrowing commitments with an additional $100 million at our request through an accordion feature.

Prior to the Fourth Amendment and as of March 31, 2025, the borrowing base under the Credit Facility was $300.0 million with $168.0 million of borrowings outstanding leaving $132.0 million of availability under the Credit Facility.

On April 18, 2025, we entered into the Fourth Amendment which provides us with up to $400.0 million in borrowing commitments with an additional $100.0 million at our request through an accordion feature.

The accordion feature is subject to certain conditions, including the absence of a default, the consent of new or existing lenders willing to provide additional commitments, and our pro forma compliance with the Credit Facility ’ s financial covenants.

As of June 30, 2025, the borrowing base under the Credit Facility was $354.3 million with $182.0 million of borrowings outstanding leaving $172.3 million of availability under the Credit Facility.

Our cash flows from operating and investing activities are subject to a degree of volatility due primarily to (i) the consistency of our customers in remitting amounts owed to us for our services in full and on a timely basis and (ii) the timing of payments to our vendors and suppliers for capital projects which are often made well in advance of placing new compressor equipment into service.

In order to mitigate such volatility we employ disciplined efforts to monitor customer credit and maintain communications to support collection efforts when necessary.

Furthermore, and in certain circumstances, we require deposits in advance of transactions that require substantial investment on our part.

To the extent necessary, we rely on the availability of our Credit Facility to fund capital expenditures beyond that provided by our cash flows from operating activities.

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The level of our capital expenditures will vary in future periods depending on energy market conditions and other related economic factors.

Based upon existing economic and market conditions, we believe that cash on hand, cash flows from operating activities and borrowings under the Credit Facility will be sufficient to satisfy our capital and liquidity requirements for at least the twelve months subsequent to the date that this Quarterly Report on Form 10-Q was filed.

Based upon existing economic and market conditions, we believe that cash on hand, cash flows from operating activities and borrowings under the Credit Facility will be sufficient to satisfy our capital, dividend and liquidity requirements for at least the twelve months subsequent to the date that this Quarterly Report on Form 10-Q was filed.

We also believe we have flexibility with respect to our financing alternatives and can make adjustments to our capital expenditure plans if circumstances warrant.

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Cash From Operating Activitie s.

As of March 31, 2025, we had $2.1 million of cash on hand.

As of June 30, 2025, we had $0.3 million on hand and our cash provided by operating activities was $32.3 million for the six months ended June 30, 2025.

For additional information and an analysis of our historical cash flows from operating activities, see the “Cash Flows” discussion that follows.

Credit Facility Borrowings .

During the three months ended March 31, 2025, we repaid $2.0 million, net of borrowings, under the Credit Facility.

During the six months ended June 30, 2025, we borrowed $12.0 million, net of repayments, under the Credit Facility.

The following table summarizes our borrowing activity under the Credit facility for the period presented:

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End of Period Weighted-average Maximum Weighted-average Rate

Three months ended March 31, 2025 $ 168,000 $ 169,003 $ 170,000 7.97 %

Three months ended June 30, 2025 $ 182,000 $ 175,427 $ 182,000 7.46 %

Six months ended June 30, 2025 $ 182,000 $ 172,867 $ 182,000 7.68 %

For additional information regarding the terms and covenants under the Credit Facility, see the “Capitalization” discussion that follows.

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The following table summarizes our cash flows for the periods presented:

Three months ended March 31,

Six months ended June 30,

Net cash provided by operating activities $ 32,263 $ 31,119

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Net increase in cash and cash equivalents

$ (1,817) $ 870

Cash Flows from Operating Activities.

Our cash flows from operating activities increased by $15.7 million during the three months ended March 31, 2025, as compared to the comparable period in 2024.

Our cash flows from operating activities increased by $1.1 million during the six months ended June 30, 2025, as compared to the comparable period in 2024.

From a broad perspective, cash flows improved due to:

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Cash Flows from Investing Activities.

For the three months ended March 31, 2025, and 2024, we invested approximately $19.3 million and $10.9 million, respectively, in rental equipment, property and other equipment.

For the six months ended June 30, 2025, and 2024, we invested approximately $45.1 million and $28.3 million, respectively, in rental equipment, property and other equipment.

Included in these totals for 2025 and 2024 were $41.2 million and $28.2 million in new equipment to our rental fleet and $3.9 million and less than $0.1 million in other property and equipment, respectively.

1 unchanged sentence

Cash Flows from Financing Activities.

During 2025, we had net repayments of $2.0 million under the Credit Facility while the 2024 period included net borrowings of $8.0 million.

During the six months ended June 30, 2025 we had net borrowings of $12.0 million and for the six months ended June 30, 2024, we had net repayments of $1.0 million under the Credit Facility.

Capitalization

The following table summarizes our total capitalization as of the dates presented:

March 31, December 31,

June 30, December 31,

Credit facility borrowings $ 182,000 $ 170,000

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Please see Note 9 ( “ Long-Term Debt ” ) to our Condensed Consolidated Financial Statements for a thorough discussion of these matters regarding our Credit Facility.

As of March 31, 2025 we had $168.0 million outstanding under our Credit Facility with a weighted average interest rate of 7.93%.

As of March 31, 2025, prior to the effective date of the Fourth Amendment, we had approximately $132.0 million available for borrowing under the Credit Facility, subject to a borrowing base determination.

As of March 31, 2025, we were in compliance with all financial covenants in our Credit Facility.

As of June 30, 2025 we had $182.0 million outstanding under our Credit Facility with a weighted average interest rate of 7.23%.

As of June 30, 2025, we had approximately $172.3 million available for borrowing under the Credit Facility, subject to a borrowing base determination.

As of June 30, 2025, we were in compliance with all financial covenants in our Credit Facility.

Critical Accounting Estimates

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From time-to-time, we enter into off-balance sheet arrangements and transactions that can give rise to off-balance sheet obligations.

As of March 31, 2025, the off-balance sheet arrangements and transactions that we have entered into include purchase agreements for certain compressor unit components that are fully anticipated consistent with our capital expenditure plans.

As of June 30, 2025, the off-balance sheet arrangements and transactions that we have entered into include purchase agreements for certain compressor unit components that are fully anticipated consistent with our capital expenditure plans.

We do not believe that these arrangements are reasonably likely to materially affect our liquidity or availability of capital resources.

2 unchanged sentences

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 2. Management’s Discussion and Analysis