NGS · Natural Gas Services Group, Inc.

Natural Gas Services Group delivered exceptional Q1 2026 results driven by record rental revenue of $47.1 million (up 21% YoY), fueled by 17% growth in rented horsepower to 575,000 and peak utilization of 86.9%. Management attributes this to large horsepower fleet additions, pricing discipline at $27.51 per horsepower per month (up 2% YoY), and a favorable mix shift to higher-return electric motor drive units. Adjusted EBITDA rose 26% to $24.3 million, with rental adjusted gross margin expanding to 63.7% (up 180 bps YoY) from operating leverage and minimal setbacks. Net income increased to $6.8 million or $0.53 per diluted share. Balance sheet remains strong with leverage at 2.33x (lowest among peers) and $174 million borrowing capacity, supporting $15.2 million capex including $12.3 million growth spend. Post-quarter, the company received $12.3 million tax refund (~$1.00/share) and classified non-core real estate for sale. Dividend hiked 36% to $0.15/share for Q2, signaling cash flow confidence. Guidance raised to $92.5-97.5 million adjusted EBITDA for 2026, reflecting contracted deployments and at least 50,000 horsepower additions. Management views industry fundamentals as constructive amid tight supply, improving oil/gas sentiment, and midstream buildout, though notes emerging inflation and seasonality risks. Strategic focus on fleet optimization, M&A, and capital returns positions NGS for sustained growth.