What changed in this filing

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Item 9A. Controls and Procedures

2026-03-16 compared with 2025-03-17 · 263 added, 236 removed, 727 unchanged (41% of the section changed)

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Based on the results of management’s evaluation described above, management concluded that our ICFR was effective as of December 31, 2025.

Remediation of Previously Identified Material Weakness

As previously reported in Part II, Item 9A.

“Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, 2023, we disclosed a material weakness related to inventory.

Specifically, control activities related to year-end inventory count procedures and the process to review and approve inventory adjusting journal entries.

We have completed the execution of our remediation plan for this material weakness and, as of December 31, 2024, successfully remediated the material weakness by implementing and successfully testing the following actions:

• We updated and implemented new policies and procedures related to work in process inventory.

• We hired additional management with a focus on inventory control and inventory best practices.

• We relocated certain inventory to centralized warehouses.

• We improved and enforced our formalized inventory count and inventory adjustment procedures which were applied to our end-of-year inventory counts.

• We added additional inventory safeguards in our warehouses limiting physical access to our inventory.

• We limited the number of employees authorized to record adjustments in our accounting software through additional IT controls with respect to inventory transfers.

• We have enhanced efforts to ensure our employees understand the importance of internal controls and compliance with corporate policies and procedures.

Attestation Report of the Registered Public Accounting Firm

The effectiveness of ICFR as of December 31, 2024 was audited by Ham, Langston & Brezina LLP, an independent registered public accounting firm, as stated in its report included in Part IV, Item 15 “ Exhibits and Financial Statement Schedules ” of this Annual Report on Form 10-K.

Ham, Langston & Brezina LLP, an independent registered public accounting firm, has issued an attestation report on the effectiveness of the Company’s ICFR as of December 31, 2025, which included in Part IV, Item 15 “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

During the year ended December 31, 2024, except as discussed above, there were no other changes in our ICFR during the year ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our ICFR.

During the quarter ended December 31, 2025, there were no changes in our ICFR that have materially affected, or are reasonably likely to materially affect, our ICFR.

OTHER INFORMATION

Taylor , our Chairman of the Board of Directors , adopted a Rule 10b5-1 trading agreement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to an aggregate of 100,000 shares of the Company’s common stock , subject to various volume amounts and price thresholds.

The plan became effective on August 21, 2024 and the plan provided that it would terminate on August 19, 2025 , unless sooner terminated under its terms.

The 10b5-1 Plan was entered into during an open insider trading window and no sales commenced under the plan until completion of the required cooling off period under Rule 10b5-1.

The 10b5-1 Plan terminated pursuant to its terms on or about January 21, 2025, in connection with the final sale of shares covered by the plan.

Taylor , a member of the Board of Directors , adopted a Rule 10b5-1 trading agreement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to an aggregate of 100,000 shares of the Company’s common stock , subject to various volume amounts and price thresholds.

The 10b5-1 Plan was entered into during an open insider trading window in December 2025 and sales commenced under the plan after completion of the required cooling off period under Rule 10b5-1.The plan became effective on March 5, 2026 and the aggregate sales were completed by March 6, 2026 .

No other director or officer of the Company adopted , modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K, during the three months ended December 31, 2025.

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The Code of Business Conduct and Ethics is posted in the “Investor Relations” section of our website at www.ngsgi.com.

The Code of Business Conduct and Ethics maybe obtained free of charge by writing before to Natural Gas Services Group, Inc., Attn:

Investor Relations, 404 Veterans Airpark Lane, Ste 300, Midland, TX 79705.

The Code of Business Conduct and Ethics may be obtained free of charge by writing before to Natural Gas Services Group, Inc., Attn:

Investor Relations, 601 State Street, Suite 400, Southlake, TX 76092.

EXECUTIVE COMPENSATION

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The following financial statements are filed as a part of this Annual Report on Form 10-K:

Report s of Independent Registered Public Accounting F i rm (PCAOB ID 298)

Reports of Independent Registered Public Accounting Firm (PCAOB ID 298)

Consolidated Balance Sheets

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333-238794) and filed with the Securities and Exchange Commission on December 13, 2024).

2019 Equity Incentive Plan, as amended (Incorporated by reference to Exhibit 4.3 of the Registrant’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on July 12, 2022).

Stock Option Plan, as amended and restated (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 21, 2016).

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Third Amendment to Amended and Restated Credit Agreement dated June 25, 2024, among Natural Gas Services Group, Inc., the other Loan Parties thereto, Texas Capital Bank, in its capacity as Administrative Agent and the Lenders party thereto (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 28, 2024).

Retention Agreement dated September 19, 2023 between Natural Gas Services Group, Inc.

and James Hazlett (Incorporated by reference to Exhibit 10.11 of the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 14, 2023).

Fourth Amendment to Amended and Restated Credit Agreement dated April 18, 2025 among Natural Gas Services Group, Inc.

the other Loan Parties thereto, Texas Capital Bank, in its capacity as Administrative Agent and the Lenders Party thereto (Incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 11, 2025).

Employment Agreement between Brian L.

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dated November 1, 2024 (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 7, 2024).

Amended and Restated Insider Trading Policy.

Form of Indemnification Agreement by and between Natural Gas Services Group, Inc.

and Certain Indemnitees (incorporated by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 12, 2025).

Transition and Mutual Separation Agreement between Natural Gas Services Group, Inc.

Tucker dated August 8, 2025 (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 11, 2025).

Amended and Restated Insider Trading Policy (incorporated by reference to Exhibit 10.2 of the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 17, 2025).

Subsidiaries of the Registrant.

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March 16, 2026

/s/ Stephen C.

Taylor Chairman of the Board of Directors March 17, 2025

/s/ Donald Tringali Director March 17, 2025

Donald Tringali

Jenvey Director March 17, 2025

Holley Director March 17, 2025

/s/ Donald J.

Tringali Chairman of the Board of Directors March 16, 2026

Anthony Gallegos, Jr.

Director March 16, 2026

Anthony Gallegos, Jr.

/s/ Georganne Hodges Director March 16, 2026

Georganne Hodges

Jenvey Director March 16, 2026

Holley Director March 16, 2026

/s/ Stephen C.

Taylor Director March 16, 2026

NATURAL GAS SERVICES GROUP, INC.

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Houston, Texas ;

PCAOB ID 298 )

Consolidated Balance Sheets as of December 31, 2025 and 2024

Consolidated Statements of Operations for the Year Ended December 31, 2024, 2023 and 2022

Consolidated Statements of Stockholders’ Equity for the Year Ended December 31, 2024, 2023 and 2022

Consolidated Statements of Cash Flows for the Year Ended December 31, 2024, 2023 and 2022

Consolidated Statements of Operations for the Years Ended December 31, 2025, 2024 and 2023

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2025, 2024 and 2023

Consolidated Statements of Cash Flows for the Years Ended December 31, 2025, 2024 and 2023

Notes to Consolidated Financial Statements:

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Trade Accounts Receivables

Assets Held for Sale and Restructuring Activities

Rental Equipment

Property and Equipment

Intangible Assets

Supplemental Balance Sheet Disclosures

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Revenues from Customers

Stock-Based and Other L o ng-Term Incentive Compensation s

Restructuring Activities

Stock-Based and Other Long-Term Incentive Compensations

Related Party Transactions

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(the “Company”) as of December 31, 2025 and 2024, and related consolidated statements of operations, stockholders ’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 16, 2026 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

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Natural Gas Services Group, Inc.

Opinion on Internal Control over Financial Reporting

Opinion on the Internal Control over Financial Reporting

We have audited Natural Gas Services Group, Inc.'s (the Company) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013 (“COSO”).

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Inventory, net of allowance for obsolescence 20,647 18,051

Federal income tax receivable 11,282 11,538

Income taxes receivable and prepayments 14,056 11,282

Prepaid expenses and other 1,696 1,075

Assets held for sale 2,227 —

Total current assets 57,123 48,176

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Property and equipment, net of accumulated depreciation 20,519 22,989

Intangible assets, net of accumulated amortization — 775

Other assets 10,619 6,342

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Total current liabilities 24,510 17,358

Credit facility 170,000 164,000

Long-term debt 230,000 170,000

Deferred income taxes 52,530 45,873

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Retained earnings 168,771 151,508

Treasury shares, at cost, 1,310 shares for each of December 31, 2024 and 2023, respectively

Treasury stock, at cost, 1,310 shares for each of December 31, 2025 and 2024, respectively

( 15,004 ) ( 15,004 )

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Retirement of rental equipment 728 28 505

Gain on sale of property and equipment, net ( 430 ) ( 481 ) ( 250 )

Gain on disposition of assets, net ( 270 ) ( 430 ) ( 481 )

Total operating costs and expenses 135,017 123,417 110,710

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Interest expense ( 13,565 ) ( 11,927 ) ( 4,082 )

Other income (expense) 268 245 ( 108 )

Interest income 2,444 — —

Other income (expense), net 354 268 245

Total other expense, net ( 10,767 ) ( 11,659 ) ( 3,837 )

Income (loss) before income taxes 21,666 6,620 ( 41 )

Income before income taxes 26,531 21,666 6,620

Provision for income taxes ( 6,603 ) ( 4,439 ) ( 1,873 )

Net income (loss) $ 17,227 $ 4,747 $ ( 569 )

Earnings (loss) per share:

Net income $ 19,928 $ 17,227 $ 4,747

Earnings per share:

Basic $ 1.59 $ 1.39 $ 0.39

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Stock-based compensation — — — 2 2,052 — — — 2,054

Vesting of restricted stock — — 125 — — — — — —

Vesting of restricted stock/units — — 169 — — — — — —

Taxes paid related to net shares settlement of equity awards — — — — ( 983 ) — — — ( 983 )

Purchase of treasury shares — — — — — — 535 ( 6,660 ) ( 6,660 )

Net loss — — — — — ( 569 ) — — ( 569 )

Net income — — — — — 4,747 — — 4,747

December 31, 2023 — $ — 13,688 $ 137 $ 116,480 $ 134,281 1,310 $ ( 15,004 ) $ 235,894

Stock-based compensation — — — — 1,821 — — — 1,821

Vesting of restricted stock — — 169 — — — — — —

Vesting of restricted stock/units — — 51 1 ( 1 ) — — — —

Exercise of common stock options — — 23 — 293 — — — 293

Taxes paid related to net shares settlement of equity awards — — — — ( 178 ) — — — ( 178 )

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Stock-based compensation — — — — 2,126 — — — 2,126

Vesting of restricted stock — — 51 1 ( 1 ) — — — —

Vesting of restricted stock/units and performance share units — — 107 — 108 — — — 108

Exercise of common stock options — — 14 — 168 — — — 168

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

Purchase of treasury shares — — — — — — — — —

Dividends declared — — — — — ( 2,665 ) — — ( 2,665 )

Net income — — — — — 19,928 — — 19,928

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CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ 17,227 $ 4,747 $ ( 569 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income $ 19,928 $ 17,227 $ 4,747

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 36,656 31,347 26,550

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Retirement of rental equipment 728 28 505

Gain on the sale of property and equipment, net ( 430 ) ( 481 ) ( 250 )

Gain on the disposition of assets, net ( 270 ) ( 430 ) ( 481 )

Amortization of debt issuance costs 1,168 746 425

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Inventory ( 3,710 ) 2,477 ( 669 )

Prepaid expenses and prepaid income taxes 152 ( 7 ) ( 250 )

Prepaid expenses, income taxes receivable and prepayments ( 3,395 ) 152 ( 7 )

Accounts payable and accrued liabilities 5,554 ( 17,727 ) 2,436

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Purchase of company owned life insurance, net — ( 22 ) ( 422 )

Proceeds from sale of property and equipment 476 477 372

Proceeds received from insurance for damages to equipment 96 — —

Proceeds from disposition of assets, net 94 476 477

NET CASH USED IN INVESTING ACTIVITIES ( 121,297 ) ( 71,440 ) ( 153,888 )

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Proceeds from exercise of stock options 168 293 —

Purchase of treasury shares — — ( 6,660 )

Payment of dividends ( 2,637 ) — —

Taxes paid related to net share settlement of equity awards ( 6 ) ( 178 ) ( 983 )

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Interest paid $ 14,793 $ 18,394 $ 7,053

Income taxes paid $ — — —

NON-CASH TRANSACTIONS:

Income taxes paid, net of refunds received $ 259 $ — $ —

SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS:

Transfer of rental equipment to inventory $ — $ 51 $ 665

Transfer of right of use assets to property and equipment $ — $ 2,641 $ —

Transfer of property and equipment to assets held for sale $ 2,227 $ — $ —

Accrued purchases of property and equipment $ 1,975 $ 2,687 $ —

Right of use asset acquired through a finance lease $ 2,174 $ 1,146 $ —

Right of use asset acquired through an operating lease $ 563 $ 63 $ 229

Right of use assets acquired through a finance lease $ — $ 2,174 $ 1,146

Right of use assets acquired through an operating lease $ 1,989 $ 563 $ 63

See accompanying notes to these consolidated financial statements.

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Natural Gas Services Group, Inc.

(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 and related equipment for our customers’ oil and gas production and processing facilities, generally using equipment from OEM suppliers along with limited in-house assembly.

We are headquartered in Midland, Texas, with an assembly facility located in Tulsa, Oklahoma, a repair and overhaul shop in Midland, Texas, and service facilities located in major oil and gas producing basins in the United States (“U.S.”).

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

We rent, design, install, service and maintain compressors and related equipment and parts for our customers’ oil and gas production and processing facilities, generally using equipment from OEM suppliers along with limited in-house assembly.

We are headquartered in Southlake, Texas, with administrative offices in Midland, Texas, an engineering facility located in Tulsa, Oklahoma, and service facilities located in major oil and gas producing basins in the continental United States (“U.S.”).

Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The accompanying Consolidated Financial Statements were prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and include the accounts of the Company, its subsidiary, NGSG Properties, LLC, which owns our headquarters office building and the rabbi trust associated with our deferred compensation plan ( see Note 1 2 ).

The accompanying Consolidated Financial Statements were prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) and include the accounts of the Company, its subsidiary, NGSG Properties, LLC and the rabbi trust associated with our deferred compensation plan ( see Note 12 ).

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

Certain reclassification have been made to prior periods to conform to the current presentation.

In our Consolidated Statements of Operations, (gains) and losses on the sale of property equipment have been reclassified from selling, general and administrative expenses to a stand-alone caption included within total operating income.

Use of Estimates

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Actual results could differ from those estimates.

Significant estimates include fixed asset lives, provision for credit losses and the allowance for inventory obsolescence.

Additionally, we conduct an annual review of our long-lived assets for impairment.

In connection with the review, determining factors are based on estimates that can significantly impact the carrying value of these assets.

It is at least reasonably possible these estimates could be revised in the near term and the revisions could be material.

Significant estimates include fixed asset lives, provision for credit losses, the allowance for inventory obsolescence and the determination of carrying values in excess of fair values, when applicable, in connection with our annual review of our long-lived assets for impairment.

Cash and Cash Equivalents

For purposes of reporting cash flows, we consider all short-term investments with an original maturity of three months or less to be cash equivalents.

For purposes of reporting cash and cash equivalents and cash flows, we consider all short-term investments with an original maturity of three months or less to be cash equivalents.

At times, cash balances at banks and financial institutions may exceed federally insured amounts.

Accounts Receivable and Credit Losses

Our trade accounts receivables are not collateralized except as provided for under certain lease agreements.We perform ongoing credit evaluations of our customers and adjust credit limits based on management’s assessment of the customer’s financial condition and payment history, as well as industry and general economic conditions.

Our trade accounts receivable are generally for 30 days in accordance with the payment terms specified in our master rental service and similar agreements.

Our trade accounts receivable are substantially concentrated with customers in the exploration and production industry and range from large, multinational majors to regional firms of various sizes.

We perform ongoing credit evaluations of our customers and adjust credit limits based on management’s assessment of the customer’s financial condition and payment history, as well as industry and general economic conditions.

We continuously monitor collections and payments from our customers, and maintain an allowance for estimated credit losses based upon our historical experience and any specific customer collection issues that we have identified as well as forecasts of future economic conditions.

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Rental Revenue .

We generate revenue from renting compressor equipment to our customers for the right to control the use of the equipment ratably over the term of the underlying agreement.

Our agreements for rental equipment qualify as operating leases under Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”) as we retain the primary exposure to changes in the underlying equipment’s value as the lessor unlike a sale or secured lending arrangement.

Our agreements may also include a fee for servicing the equipment during the term of the rental contract.

We generate revenue from renting compressor equipment to our customers for the right to control the use of the equipment ratably over the term of the underlying master rental service and similar agreements.

Our agreements for rental equipment qualify as operating leases under the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 842, Leases , as amended (“ASC 842”), as we retain the primary exposure to changes in the underlying equipment’s value as the lessor unlike a sale or secured lending arrangement.

Our agreements may also include a fee for servicing the equipment and surcharges for fluids, including oil, during the term of the underlying rental agreement.

We have applied the practical expedient provided in ASC 842, which allows us to combine lease and non-lease components.

Our rental contracts typically range from six to 60 months.

Our rental agreements typically range from 12 to 60 months.

As a lessor, we recognize operating lease revenue on a straight-line basis with equal monthly payments over the term of the underlying agreements.

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Sales and Aftermarket Services Revenue.

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

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

We also provide routine aftermarket or call-out services on customer owned equipment.

Consistent with ASC Topic 606, Revenues from Contracts with Customers (“ASC 606”), revenue is measured and recognized based on a consideration specified in a customer’s contract, excluding any sale incentives and taxes collected on behalf of third parties (i.e.

Consistent with ASC Topic 606, Revenues from Contracts with Customers , as amended (“ASC 606”), revenue is measured and recognized based on a consideration specified in a customer’s contract, excluding any sale incentives and taxes collected on behalf of third parties (i.e.

sales and property taxes).

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For sales, revenue is recognized when control has passed to the customer generally when the equipment is completed and shipped.

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

these payments are recorded as deferred revenue within Accrued liabilities on the 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;

this is a standard industry practice and is not considered a performance obligation.

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

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

Revenue for aftermarket and other services is recognized after the services in the contract are rendered.

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The cost of inventories is determined by the weighted average method.

We regularly review inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on current and anticipated customer demand and production requirements.

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

We assess anticipated customer demand based on current and upcoming capital expenditure budgets of our major customers as well as other significant companies in the industry, along with oil and gas price forecasts and other factors affecting the industry.

Our long-term inventory consisted of raw materials and replacement parts that remain useable but that we do not expect to sell or use within the next year.

We regularly review inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on current and anticipated customer demand and assembly requirements.

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

We assess anticipated customer demand based on current and upcoming activities and budgets of our major customers as well as other significant companies in the industry, along with oil and gas price forecasts and other factors affecting the industry.

Our long-term inventory, which is fully reserved, consisted of raw materials and replacement parts that remain viable but with limited marketing opportunities.

Long-Lived Assets

Rental equipment and property and equipment are recorded at cost less accumulated depreciation, except for work-in-progress on new rental equipment which is recorded at cost until it’s complete and added to our fleet.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets.

Our rental equipment has estimated useful lives between 15 and 25 years, while our property and equipment has estimated useful lives which range from 3 to 39 years.

The majority of our property and equipment, including rental equipment, is a direct cost to generating revenue.

Depreciation is computed using the straight-line method over the estimated useful lives of the major asset categories as follows:

Rental equipment 15 to 25 years

Buildings and leasehold improvements 5 to 39 years

Machinery, equipment and furniture 5 to 7 years

Computer hardware and software 3 to 5 years

Vehicles 3 years

We assess our rental equipment and property and equipment for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

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significant underperformance relative to historical or projected future cash flows;

significant adverse changes in the

extent or manner in which the asset (or asset group) is being used or its condition, including a meaningful drop in fleet utilization over the prior four quarters;

significant negative industry or company-specific trends or actions, including meaningful capital expenditure budget reductions by our major customers or other sizable exploration and production or midstream companies, as well as significant declines in oil and gas prices;

significant adverse changes in the extent or manner in which the asset (or asset group) is being used or its condition, including a meaningful drop in fleet utilization over the prior four quarters;

significant negative industry or company-specific trends or actions, including meaningful activity and budget reductions by our major customers or other sizable exploration and production or midstream companies, as well as significant declines in oil and gas prices;

legislative changes prohibiting us from leasing our compressor units;

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In the event that assets are found to be carried at amounts in excess of estimated undiscounted future cash flows, then the assets will be adjusted for impairment to a level commensurate with a discounted cash flow analysis of the underlying assets.

As of December 31, 2024, we no longer have any intangible assets ( see Note 8 ).

As of December 31, 2024, we no longer have any intangible assets.

Amortization expense attributable to our former intangible assets was $ 0.1 million for each of the years ending December 31, 2024 and 2023.

We also incurred an impairment charge of $ 0.7 million for an intangible asset attributable to a trade name during the year ended December 31, 2024.

We determine if an arrangement is a lease at inception by assessing whether it conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

GAAP requires all leases to be reported on the balance sheet as right-of-use (“ROU”) assets and lease obligations.

We determine if an arrangement is a lease at inception and determine lease classification and recognize ROU assets and liabilities on the lease commencement date based on the present value of lease payments over the lease term.

As the discount rate implicit in the lease is rarely readily determinable, we estimate our incremental borrowing rate using information available at the commencement date in determining the present value of the lease payments.

We, as a lessee, apply the practical expedient to not separate non-lease components from lease components, therefore, accounting for each separate lease component and its associated non-lease component, as a single lease component.

For each lease that (i) contains the same timing and pattern of transfer for lease and non-lease components and (ii) if the lease component, if accounted for separately, would be classified as an operating lease, we have elected to not separate non-lease components from lease components.

Right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

We determine lease classification and recognize right-of-use (“ROU”) assets and liabilities on the lease commencement date based on the present value of lease payments over the lease term.

For each lease that (i) contains the same timing and pattern of transfer for lease and non-lease components and (ii) if the lease component, if accounted for separately, would be classified as an operating lease, we have elected the practical expedient to not separate non-lease components from lease components.

ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

As substantially all of our leases do not provide an implicit rate, we use our incremental borrowing rate, which is based on a fully collateralized loan over the lease term, to determine the present value of lease payments.

Our ROU assets are included in Other assets and the related current and long-term lease obligations are included in Accrued liabilities and Other long-term liabilities, respectively, on our Consolidated Balance Sheets.

Internal-Use Software

We maintain and utilize certain computer software applications that we own to support our business information needs.

Such software is capitalized on our Consolidated Balance Sheets within Property and equipment ( see N ote 7 ) that is amortized over its useful life and recognized as a component of Depreciation and amortization in our Consolidated Statements of Operations.

In addition, certain of our information technology service contracts are considered hosting arrangements.

Accordingly, certain qualifying costs associated with the implementation of a hosting arrangement are capitalized on our Consolidated Balance Sheets within Other assets and amortized over the term of the respective contract beginning on the date for each component of the hosting arrangement when the component is ready for its intended use.

Amortization of capitalized implementation costs of our hosting arrangements are recognized in our Consolidated Statements of Operations within Selling, general and administrative expenses consistent with the fees for the associated hosting arrangement services.

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 net operating losses and tax credit carry-forwards.

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We had no liabilities for uncertain tax positions as of December 31, 2025 and 2024.

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

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

Capitalized Interest

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GAAP defines the characteristics of an operating segment as (i) being engaged in business activity from which it may earn revenue and incur expenses, (ii) being reviewed by the Company’s chief operating decision maker (“CODM”) for decisions about resources to be allocated and assess its performance and (iii) having discrete financial information.

Although we review our products to analyze the nature of our revenue, costs and expenses, the net income and non-GAAP financial measures including EBITDA and Adjusted gross margin are not captured or analyzed by these categories.

Our chief executive officer (“CEO”) serves as the CODM and does not make resource allocation decisions or assess the performance of the business based on these categories, but rather on the entire entity in the aggregate.

Although we review our service and product offerings (rentals, sales and aftermarket services) to analyze the nature of our revenue, costs and expenses, the net income and non-GAAP financial measures including EBITDA and Adjusted gross margin are not captured or analyzed by these categories.

Our chief executive officer (“CEO”) serves as the CODM and does not make resource allocation decisions or assess the performance of the business based on these service and product offerings, but rather on the entire entity in the aggregate.

Accordingly, the measures of profit and loss and total assets are effectively those of the Company as a whole as reflected in these Consolidated Financial Statements.

Based on these facts and underlying circumstances described further below, we have concluded that we operate in one business segment.

We are primarily engaged in the business of leasing natural gas compressors to our customers.

In addition, we design, assemble and sell natural gas compressors and provide aftermarket services on compressors in our fleet and to third parties.

We are primarily engaged in the business of leasing natural gas and electric compression equipment to our customers.

In addition, we design, sell, install, service and maintain compressors and related equipment and parts.

These business activities are similar in all geographic areas in which we operate.

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18,814 16,875

Allowance for credit losses ( 1,249 ) ( 823 )

Provision for credit losses ( 317 ) ( 1,249 )

Total trade accounts receivable, net $ 18,497 $ 15,626

Our trade accounts receivable consist of customer obligations due under normal trade terms for (i) operating leases for the use of our natural gas compressors, (ii) the sale of compressors and flare systems and (iii) the performance of aftermarket services.

Our trade accounts receivable consist of customer obligations due under normal trade terms for (i) operating leases for the use of our compressors, (ii) the sale of custom/assembled compressors and parts, as well as exchange/rebuilding customer owned compressors and sale of used rental equipment and (iii) the performance of aftermarket services.

Major Customers and Concentration of Credit Risk

Rental revenue and sales from Occidental Permian, LTD.

(“Oxy”) in 2024, 2023 and 2022 amounted to 54 percent, 50 percent and 42 percent of revenue, respectively.

(“Oxy”) and Devon Energy Corporation (“Devon”) in 2025, 2024 and 2023 amounted to 59 percent, 59 percent and 52 percent of revenue on a combined basis, respectively.

No other single customer accounted for more than 10 percent of our revenues in 2025, 2024 and 2023.

Oxy’s accounts receivable balances amounted to 52 percent and 64 percent of our accounts receivable as of December 31, 2024 and 2023, respectively.

No other customers amounted to more than 10 percent of our accounts receivable as of December 31, 2024 and 2023.

Allowance for Credit Losses

The following table summarizes the changes in our allowance for credit losses for the periods presented:

Oxy’s and Devon’s accounts receivable balances amounted to 62 percent and 60 percent of our accounts receivable as of December 31, 2025 and 2024, respectively.

No other customers amounted to more than 10 percent of our accounts receivable on a combined basis as of December 31, 2025 and 2024, respectively.

Provision for Credit Losses

The following table summarizes the changes in our provision for credit losses for the periods presented:

Year Ended December 31,

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Ending balance $ 317 $ 1,249 $ 823

Management believes that the allowance is adequate;

Management believes that the provision is adequate;

however, actual write-offs may exceed the recorded allowance.

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

Raw materials, net of allowance of $ 4,379 and $ 2,836 , respectively

The substantial write-off of the provision for credit losses during 2025 reflects certain aged receivables that are no longer deemed collectible.

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

Parts and supplies, net of allowance of $ 2,552 and $ 4,379 , respectively

$ 20,104 $ 17,706

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Inventory - current 20,647 18,051

Raw materials - long term, net of allowance of $ 1,488 and $ 1,168 , respectively

Parts and supplies - long term, net of allowance of $ 1,020 and $ 1,488 , respectively

Total inventory $ 20,647 $ 18,051

Our long-term inventory, which is fully reserved as of December 31, 2024, consists of excess raw materials that remain viable but with limited market opportunities.

Our long-term inventory, which is fully reserved as of December 31, 2025 and 2024, consists of excess raw materials that remain viable but with limited market opportunities.

Allowance for Obsolescence

The following table summarizes the changes in our allowance for obsolescence for the periods presented:

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Ending balance $ 3,572 $ 5,867 $ 4,004

The allowance for 2023 was primarily related to our decision to cease future compressor assembly at our Midland, Texas facility, which reduced the expected future demand of certain inventory items held at this facility.

In 2024, we continued actions in support of our strategy to further outsource assembly activities to third parties resulting in an additional allowance charge.

In 2024 and 2025, we continued actions in support of our strategy to further outsource assembly activities to third parties limiting our ability to market certain assembled parts resulting in an additional allowance charges.

Assets Held for Sale and Restructuring Activities

Midland Facility

During the second quarter of 2025, we completed all activities necessary to terminate operations at our facility in Midland, Texas (the “Midland Facility”) and prepared the site, which includes an industrial building and land, for sale.

Accordingly, depreciation of the facility was suspended and the combined net carrying value of the building and land, or $ 2.2 million, was reclassified from property and equipment to an asset held for sale included as a component of current assets on our Consolidated Balance Sheet as of June 30, 2025.

We have engaged a broker and are actively marketing the facility.

The closure of the Midland Facility was part of our strategy to streamline and outsource our assembly operations and monetize company-owned real estate as disclosed previously.

We anticipate that we will complete a sale transaction for the Midland Facility in 2026.

Beginning in the first quarter of 2025, all equipment with continuing productive value was transferred from the Midland Facility to certain of our other regional service centers.

By the end of April 2025, the Midland Facility was completely vacant in anticipation of the eventual sale.

In addition, we disposed of all inventory items, including engines, frames and coolers, among other items that were fully reserved (see Note 4 ).

In connection with the complete closure of the Midland Facility, we terminated eight employees and incurred $ 0.1 million of severance and termination benefits all of which were paid and settled during April 2025.

Other Restructuring Activities

During the year ended December 31, 2024, we incurred and paid an amount less than $ 0.1 million associated with certain restructuring activities at our assembly facilities for which there were no amounts remaining outstanding.

During the year ended December 31, 2023, we incurred certain restructuring charges in the form of severance and related compensation benefits in connection with a transition in executive leadership.

Accordingly, we incurred $ 1.2 million in severance and related compensation charges in connection with our former CEO for which there were no amounts remaining outstanding with respect to this action.

Rental Equipment

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Rental equipment, net of accumulated depreciation $ 498,525 $ 415,021

We capitalized interest totaling approximately $ 4.7 million and $ 5.5 million in connection with the acquisition and assembly of compressor units for the years ended December 31, 2024 and 2023, respectively.

No interest was capitalized during 2022.

We evaluated our rental equipment for potential impairment as of December 31, 2025 and 2024 and determined that none were present.

We capitalized interest totaling approximately $ 2.5 million, $ 4.7 million and $ 5.5 million in connection with the acquisition and assembly of compressor units for the years ended December 31, 2025 and 2024 and 2023, respectively.

Depreciation expense for rental equipment was $ 32.7 million, $ 28.2 million and $ 24.0 million for the years ended December 31, 2025, 2024 and 2023, respectively.

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We routinely review our rental fleet for retirement or obsolescence as well as an assessment to determine which units are not of the type, configuration, make or model that our customers are demanding or that are not cost efficient to refurbish, maintain and/or operate.

As a result of these reviews, we recorded charges for the retirement of rental equipment of less than $ 0.1 million, $ 0.5 million and $ 0.2 million during the years ended December 31, 2024, 2023 and 2022, respectively.

As a result of these reviews, we recorded charges for the retirement of rental equipment of $ 0.7 million, less than $ 0.1 million and $ 0.5 million during the years ended December 31, 2025, 2024 and 2023, respectively.

Rental Activity

Future minimum rent payments from our customers for contractual arrangements not on a month-to-month basis at December 31, 2024, are as follows:

Future minimum rent payments for the periods presented due as of December 31, 2025 from our customers for contractual arrangements, not on a month-to-month basis, were as follows:

Year Ending December 31,

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Total $ 351,838

Property and Equipment, net

The following table summarizes our property and equipment as of the dates presented:

Useful Lives (Years) 2024 2023

Property and Equipment

The following table summarizes our property and non-rental equipment as of the dates presented:

Land $ 1,562 $ 1,680

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Office equipment and furniture 2,099 2,057

Software 5 589 573

Computer hardware and software 619 589

Machinery and equipment 5,068 4,430

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Less accumulated depreciation (1)

( 23,010 ) ( 19,160 )

Total $ 20,519 $ 22,989

(1) Includes $ 2.6 million recognized as an impairment in 2025 as discussed below.

In connection with our efforts to plan for an eventual sale of our former corporate headquarters facility including a building and land in Midland, Texas (the “Former Headquarters Property”), we undertook certain actions in the fourth quarter of 2025 to begin building-out a new leased office facility in Midland, Texas.

While the Former Headquarters Property remained in use as of December 31, 2025, these actions triggered a review for impairment of the Former Headquarters Property consistent with our plans to relocate to the new leased facility in 2026.

In our evaluation for the impairment, the cash flows that we considered were those that we expect to receive from a sale of the Former Headquarters Property, less costs to sell, or fair value.

As the carrying value of the Former Headquarters Property exceeded the fair value less costs to sell, we recognized an impairment of $ 2.6 million in the fourth quarter of 2025.

Subsequently, we entered into an exclusive listing agreement in February 2026 for the sale of the Former Headquarters Property (see Note 19 ).

Depreciation expense for property and equipment was $ 3.9 million, $ 2.4 million and $ 2.4 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Our operating leases are primarily related to property leases for field offices and office equipment.

Our operating leases have remaining lease terms of one to five years .

During 2025, we reclassified certain items of property and equipment attributable to our former Midland Facility with a carrying value of $ 2.2 million to assets held for sale (see Note 5 ).

Our operating leases are primarily related to property leases for administrative and field offices, storage facilities, temporary housing and office equipment.

Our operating leases have remaining lease terms of one to seven years .

Renewal and termination options are included in the lease term when it is reasonably certain that we will exercise the option.

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Operating lease assets Other assets $ 2,373 $ 607

Finance lease assets Other assets — 1,045

Total right of use assets $ 607 $ 1,255

Current lease liabilities - operating Accrued liabilities $ 153 $ 58

Current lease liabilities - financing Accrued liabilities — 307

Total current lease liabilities 153 365

Noncurrent lease liabilities - operating Other long-term liabilities 454 173

Noncurrent lease liabilities - financing Other long-term liabilities — 723

Total noncurrent lease liabilities 454 896

Current operating lease liabilities Accrued liabilities $ 462 $ 153

Noncurrent operating lease liabilities Other long-term liabilities 1,911 454

Total lease liabilities $ 2,373 $ 607

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Finance lease cost (3)

$ — $ 622 $ 95

(1) Lease costs are classified in the Consolidated Statements of Operations within cost of revenues and selling, general and administrative expenses.

(2) Includes costs of $ 0.6 million, $ 0.1 million and $ 0.3 million for leases with terms of 12 months or less and $ 0.4 million, $ 0.6 million and $ 0.2 million for leases with terms greater than 12 months for the years ended December 31, 2025, 2024 and 2023, respectively.

(3) All finance leases were terminated during 2024.

The following summarizes the future maturities of our lease liabilities for the periods presented:

Year Ending December 31,

Thereafter 323

Total lease payments 2,860

Imputed interest ( 487 )

Rent expense under such leases was $ 0.6 million, $ 0.2 million and $ 0.2 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Intangible Assets

In connection with our acquisition of Screw Compression Systems (“SCS”) in January 2005, we acquired certain intangible assets attributable to developed technology and the SCS trade name.

Amortization expense attributable to the developed technology recognized in each of the years ending December 31, 2024, 2023 and 2022 was $ 0.1 million and the asset is fully amortized as of December 31, 2024.

During 2024, we fully impaired the trade name intangible asset as we are no longer marketing the associated technology.

There were no impairments of these intangible assets during the years ended December 31, 2023 or 2022.

The following table summarizes our intangible assets by major asset class as of the dates presented:

December 31, 2024 December 31, 2023

Useful Life (years) Gross Carrying Value Accumulated Amortization Net Book Value Gross Carrying Value Accumulated Amortization Net Book Value

Developed technology 20 $ — $ — $ — $ 2,505 $ 2,384 $ 121

Trade name Indefinite — — — 654 — 654

Total $ 2,373

Rent expense under such leases was $ 0.4 million, $ 0.6 million and $ 0.2 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Supplemental Balance Sheet Disclosures

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Compensation 3,121 3,483

Right of use obligations 153 365

Current operating leases 462 153

Interest 273 269

Deferred revenue — 418

Sales taxes 421 355

Professional fees 426 393

Other 799 950

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Credit facility $ 230,000 $ 170,000

We have a five-year senior secured revolving credit agreement, as amended (the “Credit Facility”) with 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 a total commitment of $ 300.0 million.

We also have a right to request from the Lender, an increase to the potential aggregate commitment of up to $ 50.0 million;

We have a senior secured revolving credit agreement, as amended (the “Credit Facility”) with Texas Capital Bank, National Association as administrative agent (the “Administrative Agent”), TCBI Securities, Inc., Bank of America, N.A., and the Huntington National Bank as joint lead arrangers and joint book runners, and the lenders party thereto (the “Lenders”).

On April 18, 2025, we entered into the Fourth Amendment to the Amended and Restated Credit Agreement (the “Fourth Amendment”) with the Lenders to (i) increase the total commitment to $ 400.0 million from $ 300.0 million, (ii) expand the accordion feature to $ 100.0 million from $ 50.0 million, (iii) reduce the interest rates by 50 to 75 basis points at comparable leverage levels and, (iv) provide for a more flexible leverage covenant that began on September 30, 2025.

In connection with the Fourth Amendment, we incurred fees and debt issue costs of $ 1.3 million.

The Credit Facility provides for a total commitment of $ 400.0 million.

We also have a right to request from the Lenders, an increase to the potential aggregate commitment of up to $ 100.0 million;

provided, however, the aggregate commitment amount is not permitted to exceed $ 500.0 million.

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.

The obligations under the Credit Facility are secured by a first priority lien on most of our assets, including inventory and certain accounts receivable as well as a variable number of our leased compressor units.

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As of December 31, 2025, we had $ 230.0 million outstanding under our Credit Facility with a weighted average interest rate of 6.59 %.

As of December 31, 2024, we had approximately $ 130.0 million available for borrowing under the Credit Facility, subject to borrowing base determination.

As of December 31, 2025, we had approximately $ 170.0 million available for borrowing under the Credit Facility, subject to borrowing base determination that was determined to be $ 400.0 million.

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

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At any time before the maturity of the Credit Facility, 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 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.

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 Administrative Agent 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 Administrative Agent 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 Administrative Agent in its sole discretion.

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

Interest and Fees.

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and (c) the Adjusted Term SOFR for such day plus 1.00 %.

The Applicable Margin is determined based upon the leverage ratio as set forth in the most recent compliance certificate received by the Lender for each fiscal quarter from time to time pursuant to the Credit Facility.

The Applicable Margin is determined based upon the leverage ratio as set forth in the most recent compliance certificate received by the Administrative Agent for each fiscal quarter from time to time pursuant to the Credit Facility.

Depending on the leverage ratio, the Applicable Margin can be 1.50 % to 2.25 % for Base Rate Loans (as defined in the Credit Facility) and 2.50 % to 3.25 % for Term SOFR Loans and for requested letters of credit.

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or change the nature of our business.

In addition, we are subject to certain financial covenants in the Credit Facility 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 fiscal quarters ending on March 31, 2025 and June 30, 2025, (c) and 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 the fiscal quarter ended 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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2025 2024 2023

Current income tax expense:

Current income tax benefit (expense):

Federal $ 156 $ ( 88 ) $ —

State ( 102 ) ( 114 ) ( 35 )

Total current income tax expense ( 202 ) ( 35 ) ( 17 )

Total current income tax benefit (expense) 54 ( 202 ) ( 35 )

Deferred income tax (expense) benefit:

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State ( 954 ) 219 102

Total deferred income tax (expense) benefit ( 4,237 ) ( 1,838 ) ( 511 )

Total deferred income tax expense ( 6,657 ) ( 4,237 ) ( 1,838 )

Provision for income taxes $ ( 6,603 ) $ ( 4,439 ) $ ( 1,873 )

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Effective rate $ ( 6,603 ) 24.8 % $ ( 4,439 ) 20.5 % $ ( 1,873 ) 28.3 %

We file income tax returns in the U.S.

federal jurisdiction and various state jurisdictions.

With few exceptions, we are no longer subject to U.S.

federal or state income tax examination by tax authorities for years before 2015.

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, among other things, permits federal income tax net operating loss (“NOL”) carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021.

In addition, the CARES Act allows 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 filed carryback claims for these losses to the preceding five years.

In connection with the filing of these claims, we initially recorded a federal income tax receivable of approximately $ 15.0 million and an increase of approximately $ 10.1 million to our deferred tax liability as of March 31, 2020.

During 2020, we received federal income tax refunds corresponding to the 2018 NOL carryback leaving approximately $ 11.3 million remaining to be refunded.

In conjunction with the remaining $ 11.3 million income tax refund claim, we received a notice from the Internal Revenue Service (“IRS”) on March 8, 2023, stating that our income tax returns for 2015, 2016, 2017 and 2019 were selected for examination.

Furthermore and as is customary for income tax refunds of this magnitude, the IRS is required to review the refund claim and provide a report to the Joint Committee on Taxation of the U.S.

Congress (“JCT”).

The following table summarizes the income tax effects of temporary differences that give rise to significant portions of deferred income tax assets and (liabilities) as of the periods presented :

The following table summarizes the income tax effects of temporary differences that give rise to significant portions of deferred income tax assets and (liabilities) as of the dates presented:

Deferred income tax assets:

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Property and equipment ( 84,329 ) ( 73,198 )

Intangible assets — ( 143 )

Total deferred income tax liabilities ( 84,329 ) ( 73,198 )

Net deferred income tax liabilities $ ( 52,530 ) $ ( 45,873 )

We file income tax returns in the U.S.

federal jurisdiction and various state jurisdictions.

With few exceptions, we are no longer subject to U.S.

federal or state income tax examination by tax authorities for years before 2020.

Income Taxes Receivable

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, among other things, permits federal income tax net operating loss (“NOL”) carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021.

In addition, the CARES Act allows 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 filed carryback claims for these losses to the preceding five years.

In connection with the filing of these claims, we initially recorded a federal income tax receivable of approximately $ 15.0 million and certain related adjustments to our deferred tax liability.

We subsequently received federal income tax refunds corresponding to the 2018 NOL carryback during 2020 leaving approximately $ 11.5 million remaining to be refunded in connection with the 2019 NOL carryback.

In conjunction with the remaining income tax refund claim, we received a notice from the Internal Revenue Service (“IRS”) on March 8, 2023, stating that our income tax returns for 2015, 2016, 2017 and 2019 were selected for examination.

Furthermore, and as is customary for income tax refunds of this magnitude, the IRS was required to review the refund claim and provide a report to the Joint Committee on Taxation of the U.S.

Congress (“JCT”).

As a result of the submission of the refund claim to the JCT, the IRS completed their review of the income tax returns for 2015, 2016 and 2017.

Our request for refund was reviewed and concluded favorably with the JCT concurring with the IRS’s conclusions.

Subsequent to a delay due to the federal government shutdown in October 2025, we received a total of $ 12.3 million in the first quarter of 2026.

This amount includes tax refunds of $ 10.2 million and related interest of $ 2.1 million for the years 2015, 2016 and 2017.

After receipt of these refunds, a total of $ 1.8 million attributable solely to 2019 remains open including an income tax refund of $ 1.5 million plus interest of $ 0.3 million.

Other Income Tax Attributes

As of December 31, 2025, we had NOL carryforwards for federal income tax purposes of $ 124.2 million, which may be carried forward indefinitely and can offset up to 80% of future taxable income in any given year.

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We also had state NOL carryforwards of $ 58.5 million with carryforward periods similar to those of our federal NOLs.

We paid a total of $ 0.3 million during 2025for income taxes, net of refunds received, including $ 0.1 million to the IRS and $ 0.1 million to the State of Texas.

We have no reserves for uncertain tax positions as of December 31, 2025 and 2024.

Deferred Compensation Plan

Effective January 1, 2016, we established a non-qualified deferred compensation plan (the “Deferred Compensation Plan”) for executive officers, directors and certain eligible employees.

We maintain a non-qualified deferred compensation plan (the “Deferred Compensation Plan”) for executive officers, directors and certain eligible employees.

The assets of the Deferred Compensation Plan are held in a rabbi trust and are subject to additional risk of loss in the event of bankruptcy or insolvency of the Company.

The Deferred Compensation Plan allows for deferral of up to 90 percent of a participant’s base salary, bonus, commissions, director fees and restricted stock awards.

The Deferred Compensation Plan allows for deferral of up to 90 percent of a participant’s base salary, bonus, commissions, director fees and restricted stock and unit awards.

Company owned life insurance (“COLI”) policies are held in the rabbi trust are utilized as a source of funding for the Deferred Compensation Plan.

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For deferrals of restricted stock awards, the Deferred Compensation Plan does not allow for diversification, therefore, distributions are paid in shares of our common stock and the obligations are carried at their grant date fair values.

As of December 31, 2024 and 2023, respectively, there were no unvested RSUs being deferred.

As of December 31, 2025 and 2024, respectively, there were no unvested restricted stock and units being deferred.

As of December 31, 2025 and 2024, respectively we have released and issued 140,115 and 191,700 shares to the Deferred Compensation Plan with a value of $ 4.7 million and $ 4.8 million, respectively.

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

While the outcome of any potential claims and legal proceedings against us cannot be predicted with certainty, we have concluded that it is mot considered reasonably possible that a loss resulting from any 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 position, results of operations or cash flows.

While the outcome of any potential 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 any 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 position, results of operations or cash flows.

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

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Preferred Stock

As of December 31, 2024 and 2023, we had a total of 5.0 million authorized preferred shares which may be issued in series with rights and preferences as designated by the Board of Directors.

As of December 31, 2025 and 2024, we had a total of 5,000,000 authorized preferred shares which may be issued in series with rights and preferences as designated by our Board of Directors.

As of December 31, 2025 and 2024, there were no issued or outstanding preferred shares.

As of December 31, 2024 and 2023, we had a total of 30.0 million authorized common shares with a par value of $ 0.01 per share.

As of December 31, 2024 and 2023, there were 13.8 million and 13.7 million shares issued and 12.5 million and 12.4 million shares outstanding, respectively.

As of December 31, 2025 and 2024, we had a total of 30,000,000 authorized shares of common stock, par value $ 0.01 per share.

As of December 31, 2025 and 2024, there were 13,882,860 and 13,761,664 shares issued and 12,573,014 and 12,451,818 shares outstanding, respectively.

Additional Paid-In Capital

Additional paid-in capital includes the cumulative amounts received in excess of the par value with respect to the public offerings of our common stock and the issuance of shares in connection with our stock-based compensation plans.

In addition, additional paid-in capital is increased by the periodic cost of equity-classified stock-based compensation awards, net of any forfeitures and the cost of shares used to settle income tax obligations upon vesting.

Retained Earnings and Comprehensive Income

We have not paid any cash dividends on our common stock.

While not explicitly prohibited, cash dividends are considered restricted payments as defined in the Credit Facility and may be made provided that certain conditions are satisfied as provided for in the Credit Facility, including the absence of any defaults, among others.

Our comprehensive income is comprised only of our net income (loss) as there are no components that would be considered as other comprehensive income.

Treasury Stock

From October 23, 2020 through its expiration on September 30, 2022, we maintained an authorized share repurchase program.

During that period, we repurchased a total of 1.3 million shares of common stock for a total of $ 15.0 million, or an average of approximately $ 11.45 per share.

The reacquired shares have been recorded at cost and are reflected in Treasury stock on our Consolidated Balance Sheets.

Furthermore, additional paid-in capital is increased by the periodic cost of equity-classified stock-based compensation awards, net of any forfeitures and the cost of shares used to settle income tax obligations upon vesting.

Retained Earnings, Dividends and Comprehensive Income

Cash dividends are considered restricted payments as defined in the Credit Facility and may be made provided that certain conditions are satisfied as reflected in the Credit Facility, including the absence of any defaults, among others.

The following table summarizes our dividends declared and paid in cash for the periods presented:

Quarterly Period Ended Dividends Declared per Share Dividends Paid

December 31, 2025 $ 0.11 $ 1,383

September 30, 2025 $ 0.10 $ 1,254

Our comprehensive income is comprised only of our net income as there are no components that would be considered as other comprehensive income.

Treasury Stock and Share Repurchases

On August 8, 2025, our Board of Directors approved a share repurchase program (the “Repurchase Plan”).

The Repurchase Plan provides for the repurchase of shares of our common stock from time to time in the open market as conditions, cash reserves, cash flows and the evaluation of uses of cash for operations, growth and share repurchase may allow.

The Repurchase Plan is limited to $ 6 million and expires on August 6, 2027.

There were no share repurchases during 2025.

Revenues from Customers

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Rental $ 164,326 $ 144,236 $ 106,159

Compressors 1,746 1,800 3,601

Flares 4 87 239

Other (Parts/Rebuilds) 5,863 7,034 4,728

Parts 2,120 5,106 6,311

Other (Compressors/Rebuilds) 1,872 2,507 2,610

3,992 7,613 8,921

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Total revenue $ 172,315 $ 156,742 $ 121,167

We recognized $ 0.4 million in revenue for the year ended December 31, 2024, that was included in accrued liabilities at the beginning of 2024.

For the periods ended December 31, 2024 and 2023, we recognized revenue of less than $ 0.4 million and $ 0.1 million from amounts related to sales that were included in deferred revenue at the beginning of 2024 and 2023, respectively.

T ransaction Price Allocated to the Remaining Performance Obligations

As of December 31, 2024, we had no unsatisfied performance obligations and as of December 31, 2023, there was $ 0.4 million of deferred revenue related to unsatisfied performance obligations.

Transaction Price Allocated to the Remaining Performance Obligations

As of December 31, 2025 and 2024, we had no unsatisfied performance obligations.

Contract Costs

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Stock-Based and Other Long-Term Incentive Compensation

We maintain two stockholder approved plans for the issuance of stock-based compensation awards to our employees and Board of Director members:

We maintain two stockholder approved plans for the issuance of stock-based compensation awards to our employees, Board of Director members and certain independent contractors:

(i) the 2019 Equity Incentive Plan, as amended (the “Equity Incentive Plan”), and (ii) the 1998 Stock Option Plan, as amended (the “Stock Option Plan”).

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After consideration of the activity described in detail below, a total of 646,751 shares remained available for grant as of December 31, 2025.

Time-Vested Restricted Shares and RSUs

The following table summarizes all restricted stock and RSU (fully vested and time-vested) activity during the year ended December 31, 2024:

Time-Vested Restricted Stock and Restricted Stock Units

The following table summarizes all restricted stock and RSU activity during the year ended December 31, 2025:

Shares Weighted Average

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Outstanding, December 31, 2025 105,465 $ 20.82 3.70 $ 3,516

We recognized stock compensation expense from restricted stock and RSUs of $ 1.2 million, $ 1.3 million and $ 2.0 million for the years ended December 31, 2025, 2024 and 2023, respectively.

As of December 31, 2025, there was a total of approximately $ 1.4 million of unrecognized compensation expense related to the unvested portion of the restricted stock and RSUs.

This expense is expected to be recognized over the next 2.1 years.

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.

Cash-Settled Restricted Stock Units

The 2025 and 2024 grant of RSUs to the non-employee members of our Board of Directors that can be settled in cash represent liability-classified awards.

Accordingly, compensation expense associated with these awards accumulates as a component of Accrued liabilities on our Consolidated Balance Sheet until the awards vest and are settled.

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Performance Share Units

In connection with the PSUs granted to our CEO, Chief Operating Officer (“COO”) and Chief Financial Officer (“CFO”) potential payout for the PSU awards is based upon performance for a three-year period ending December 31, 2026 for the CEO and COO and December 31, 2027 for the CFO measured against relative total shareholder return (“TSR”) compared to a peer group of 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 as defined in the PSU agreements).

PSU awards, which have been granted to certain executive officers during the years ended December 31, 2025 and 2024, are based upon performance for a three-year period ending December 31, 2026 for the 2024 grants and December 31, 2027 for the 2025 grants measured against relative total shareholder return (“TSR”) compared to a peer group of companies as established by the Compensation Committee.

The PSU award payouts range 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 as defined in the PSU agreements).

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 the peer companies, including NGS common stock, which is deemed a “market condition,” the grant-date fair values of the PSUs have been determined using a binomial pricing model, or a Monte Carlo simulation model.

The following table summarizes the weighted average grant date fair values of PSUs granted and the assumptions used in the Monte Carlo simulation model for the determination of the grant date fair values of our PSUs for the year ended December 31, 2024:

Year Ended December 31,

Weighted-average grant date fair value of PSUs granted $ 28.22 $ 22.47

Risk free rate 3.64 % to 3.93 %

4.09 % to 4.39 %

Expected volatility 43.9 % to 46.5 %

43.4 % to 44.2 %

Expected dividend yield — % — %

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Outstanding, December 31, 2025 94,501 $ 22.47 2.22 $ —

We recognized stock compensation expense from PSUs of $ 0.6 million and $ 0.3 million for the years ended December 31, 2025 and 2024, respectively.

As of December 31, 2025, there was a total of approximately $ 1.1 million of unrecognized compensation expense related to the unvested portion of the PSUs.

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Stock Option Plan

The Stock Option Plan provides for the granting of incentive and non-qualified stock options to our employees for up to 1,000,000 shares of common stock.

The Stock Option Plan provides for the granting of incentive and non-qualified stock options for up to 1,000,000 shares of common stock.

After consideration of the activity described in detail below, a total of, 395,169 shares remained available for grant as of December 31, 2025.

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

While the Stock Option Plan expired on February 28, 2026, all stock options that were outstanding as of December 31, 2025 will remain subject to their vesting rights through their contractual lives.

Any future grants of stock options will be sourced from the Equity Incentive Plan

Option awards are generally granted with an exercise price equal to the market price of our stock at the date of grant;

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Granted 44,250 $ 22.34 $ —

Vested ( 23,666 ) $ 12.40 $ 286

Exercised ( 14,833 ) $ 14.38 $ 186

Canceled/Forfeited ( 8,833 ) $ 23.16 $ 31

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Outstanding, Exercisable, December 31, 2025 45,919 $ 20.01 5.00 $ 626

The following table summarizes information about our stock options outstanding at December 31, 2024:

The following table summarizes information about our stock options outstanding as of December 31, 2025:

Range of Exercise Prices Options Outstanding Options Exercisable

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From time to time and under certain circumstances, the Compensation Committee of our Board of Directors may grant cash-based incentive compensation awards that vest over periods greater than one year as a supplement to stock-based awards and in addition to customary annual incentive cash bonuses.

Total compensation expense related to these long-term incentive awards was approximately $ 0.4 million and $ 1.0 million, respectively, for the years ended December 31, 2023 and 2022.

Total compensation expense related to these long-term incentive awards was approximately $ 0.4 million for the year ended December 31, 2023.

The awards associated with these compensation charges were fully vested and settled in cash prior to December 31, 2023.

Accordingly, there were no amounts remaining as unrecognized compensation and no outstanding obligations as of December 31, 2024 for these and any similar awards.

Restructuring Activities

During the years ended December 31, 2023 and 2022, we incurred certain restructuring charges in the form of severance and related compensation benefits in connection with a transition in executive leadership.

Accordingly, we incurred $ 2.3 million in severance and related compensation charges in connection with our former CEO as well as $ 0.2 million of severance charges attributable to the resignation of the interim CEO during 2022.

We incurred an additional $ 1.2 million of severance and related compensation charges attributable to this transition during 2023.

As of December 31, 2023, there were no amounts outstanding with respect to this action.

During the year ended December 31, 2024, we incurred an amount less than $ 0.1 million associated with certain restructuring activities at our assembly facilities for which there were no amounts outstanding as of December 31, 2024.

Accordingly, there were no amounts remaining as unrecognized compensation and no outstanding obligations as of December 31, 2025 and 2024 for these and any similar awards.

Related Party Transactions

During the years ended December 31, 2024, 2023 and 2022 we sold $ 0.7 million, $ 0.9 million, and $ 0.6 million, respectively, of compressor components to N-G Joint Venture, LLC (“N-G”) our 14 % joint venture.

During the years ended December 31, 2025, 2024 and 2023 we sold less than $ 0.1 million, $ 0.7 million, and $ 0.9 million, respectively, of compressor components to N-G Joint Venture, LLC (“N-G”) our 14 % joint venture.

As of December 31, 2025 and 2024, we had accounts receivable of $ 0.1 million and $ 0.1 million with N-G, respectively.

During the years ended December 31, 2024 and 2023, we paid less than $ 0.1 million and $ 0.3 million, respectively, to Mill Road Capital, a large shareholder, for expense reimbursements primarily related to our cooperation agreement.

During the years ended December 31, 2024 and 2023, we paid less than $ 0.1 million and $ 0.3 million, respectively, to Mill Road Capital, a shareholder that previously held more than five percent of outstanding shares, for expense reimbursements primarily related to a cooperation agreement that expired in 2025.

No amounts were paid during 2025.

Earnings (Loss) per Share

Earnings per Share

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

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2025 2024 2023

Numerator for basic and diluted earnings (loss) per share:

Net income (loss) $ 17,227 $ 4,747 $ ( 569 )

Denominator for basic earnings (loss) per common share:

Numerator for basic and diluted earnings per share:

Net income $ 19,928 $ 17,227 $ 4,747

Denominator for basic earnings per common share:

Weighted average common shares outstanding - Basic 12,538 12,412 12,316

Denominator for diluted earnings (loss) per share:

Denominator for diluted earnings per share:

Weighted average common shares outstanding 12,538 12,412 12,316

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Weighted average common shares outstanding - Diluted 12,695 12,554 12,383

Earnings (loss) per share:

Earnings per share:

Basic $ 1.59 $ 1.39 $ 0.39

Diluted $ 1.57 $ 1.37 $ 0.38

During the year ended December 31, 2024, 13,345 shares of restricted stock and RSUs and 83,917 stock options were not included in the computation of diluted earnings per share due to their antidilutive effect.

During the year ended December 31, 2023, 10,984 shares of restricted stock and RSUs and 129,751 stock options were not included in the computation of diluted loss per share due to their antidilutive effect.

During the year ended December 31, 2022, 250,847 shares of restricted stock and RSUs and 201,584 stock options were not included in the computation of diluted earnings per share due to their antidilutive effect.

The following table summarizes the actual number of stock-based compensation awards that were excluded from the determination of diluted earnings per share due to their anti-dilutive effect for the periods presented:

Year Ended December 31,

2025 2024 2023

Stock options 89,667 83,917 129,751

Restricted stock and RSUs — 13,345 10,984

89,667 97,262 140,735

Subsequent Events

On January 28, 2025, we announced our intent to close our repair and overhaul facility in Midland, Texas and cease operations by April 1, 2025.

In addition, we have initiated efforts to market the facility and the underlying real property.

We anticipate terminating approximately 13 employees that work at this facility and will be offering customary termination and severance benefits.We have evaluated all events subsequent to the balance sheet date as of December 31, 2024 and through the date this report was issued and determined that, other than the action noted above, there have been no other events that would require adjustments or additional disclosure to our Consolidated Financial Statements.

On February 9, 2026, we announced that our Board of Directors declared a cash dividend of $ 0.11 per share to stockholders of record as of February 18, 2026.

The dividend was paid on March 4, 2026 for a total of $ 1.4 million.

On February 10, 2026, we entered into an exclusive listing agreement to sell the Former Headquarters Property.

The proposed sale of the Former Headquarters Property as well as our ongoing effort to sell our former fabrication facility in Midland (see N o te 5 ) are part of our broader efforts to monetize certain noncash assets.

We anticipate a closing of the Former Headquarters Property in the second half of 2026.

We have evaluated all events subsequent to the balance sheet date as of December 31, 2025 and through the date this report was issued and determined that there have been no other events that would require adjustments or additional disclosures to our Consolidated Financial 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-K

Item 9A. Controls and Procedures