AROC 10-K & 10-Q changes, risk factors and insider trading

Uncertainty on future inflation trends and fluctuations onin interest rates have created further uncertainty for the economy and for our customers. Elevated inflation will increase our labor costs and the costs of parts, lube oil and other materials used in our operations. An increase in inflation rates could negatively affect our profitability and cash flows, due to higher wages, higher operating costs, higher financing costs, and/or higher supplier prices. We may be unable to pass along such higher costs to our customers. In addition, inflation may adversely affect customers’ financing costs, cash flows, and profitability, which could adversely impact their operations and our ability to collect receivables.

Additionally, trade tensions or restrictions on free trade, including the tariffs that have been imposed and proposed by the current administration, could exacerbate these effects. Any widespread imposition of new or increased tariffs and trade restrictions could increase the cost of imported materials and products, such as steel, which accordingly could increase costs of our products, disrupt our supply chain, cause adverse financial impacts due to volatility in foreign exchange rates and interest rates, increase inflationary pressures on raw materials and energy, and negatively impact our profit margins. New or increased tariffs could also negatively affect U.S. national or regional economies, which could affect the demand for our products.

The conflict in Ukraine, the Israel-Hamas warwar, other geopolitical conflicts, and related price volatility and geopolitical instability could negatively impact our business.

In late February 2022, Russia launched significant military action against Ukraine, and in October 2023, Israel launched a military response against Hamas in Gaza. These ongoing conflicts and other geopolitical conflicts, such as the developments in Venezuela, have caused, and could intensify, volatility in oil and natural gas prices, and the extent and duration of these military actions, sanctions and resulting market disruptions could be significant and could potentially have a substantial negative impact on the global economy and/or our business for an unknown period of time. Any such volatility and disruptions may also magnify the impact of other risks described in this “Risk Factors” section.

Our operations entail inherent risks, including equipment defects, malfunctions and failures and natural disasters, which could result in uncontrollable flows of natural gas or well fluids, fires and explosions. These risks may expose us, as an equipment operator, to liability for personal injury, wrongful death, property damage, pollution and other environmental damage. The insurance we carry against many of these risks may not be adequate to cover our claims or losses. Our insurance coverage includes property damage, general liability and commercial automobile liability and other coverage we believe is appropriate. Additionally, we are substantially self–insuredself-insured for workers’ compensation and employee group health claims in view of the relatively high per–incidentper-incident deductibles we absorb under our insurance arrangements for these risks. We are also self–insured -insured for property damage to our offshore assets. Further, insurance covering the risks we expect to face or in the amounts we desire may not be available in the future or, if available, the premiums may not be commercially justifiable. If we were to incur substantial liability and such damages were not covered by insurance or were in excess of policy limits, or if we were to incur liability at a time when we are not able to obtain liability insurance, our business, results of operations and financial condition could be negatively impacted.

We face significant competitive pressures that may cause us to lose market share and harmnegatively affect our business, results of operations, financial performance.condition and cash flows.

In addition, we could face significant competition from new entrants into the compression services business.business and heightened competition from consolidation of our competitors. Some of our existing competitors or new entrants may expand or fabricate new compressors that would create additional competition for the services we provide to our customers. Certain of these competitors may have greater financial, technical and marketing resources than us, and may be in a better competitive position. In addition, our customers may purchase and operate their own compression fleets in lieu of using our natural gas compression services. In recent years, consolidation in the oil and gas industry has led to combinations of our customers, who have leveraged their size and purchasing power to pursue economies of scale and pricing concessions, which could lead to decreased demand for our products and services. We also may not be able to take advantage of certain opportunities or make certain investments because of our debt levels and our other obligations. Any of these competitive pressures could have a material adverse effect on our business, results of operationsoperations, financial condition and financialcash condition.flows.

Any acquisitions we completecomplete, including the NGCS Acquisition, are subject to substantial risks that could reduce our ability to make distributions to our common stockholders.

Even if we do make acquisitions that we believe will increase the amount of cash available for distribution to our common stockholders, these acquisitionsacquisitions, including the NGCS Acquisition, may nevertheless result in a decrease in the amount of cash available for distribution to our common stockholders. Any acquisitionacquisition, including the NGCS Acquisition, involves potential risks, including, among other things:

We have developed, and we will continue to develop objectives related to sustainability matters. Statements related to these objectives are made using various underlying assumptions and reflect our current intentions, and do not constitute a guarantee that they will be achieved.achieved or achieved within the projected timeframe. Our efforts to research, establish, accomplish, and accurately report on these objectives expose us to numerous operational, reputational, financial, legal and other risks. Our ability to achieve any objective is subject to numerous factors and conditions, many of which are outside of our control, including the availability of alternative energy sources in the jurisdictions in which we operate, the capacity of electrical grids to support traditional and alternative energy sources, and the broader economic and legal circumstances affecting energy and electricity locally. We cannot predict the ultimate impact of achieving our objectives, or the various implementation aspects, on our financial condition and results of operations.

If we were to anticipate non–compliancenon-compliance with these financial ratios, we may take actions to maintain compliance with them. These actions include reductions in our general and administrative expenses, capital expenditures or the payment of cash dividends. Any of these measures may reduce the amount of cash available for payment of dividends and the funding of our business requirements, which could have an adverse effect on our business, operations, cash flows or the price of our common stock.

The breach of any of the covenants under the Debt Agreements could result in a default under the Debt Agreements, which could cause indebtedness under the Debt Agreements to become due and payable. If the repayment obligations under the Debt Agreements were to be accelerated, we may not be able to repay the debt or refinance the debt on acceptable terms and our financial position would be materially adversely affected. A material adverse effect on our assets, liabilities, financial condition, business or operations that, taken as a whole, impacts our ability to perform the obligations under the Debt Agreements could lead to a default under those agreements. Further, a default under one or more of the Debt Agreements would trigger cross–defaultcross-default provisions under the other Debt Agreements, which would accelerate our obligation to repay the indebtedness under those agreements.

As of December 31, 2024,2025, we were in compliance with all covenants under the Debt Agreements.Agreements, excluding the 2034 Notes, which were issued in January 2026 and not subject to covenant compliance as of December 31, 2025. See Note 15 (“Long-Term Debt”) for further details.

Historically, we have financed acquisitions, operating expenditures and capital expenditures with a combination of cash provided by operating and financing activities. However, to the extent we are unable to finance our operating expenditures, capital expenditures, scheduled interest and debt repayments and any future dividends with net cash provided by operating activities and borrowings under the Credit Facility, we may require additional capital. Periods of instability in the capital and credit markets (both generally and in the oil and gas industry in particular) could limit our ability to access these markets to raise debt or equity capital on affordable terms or to obtain additional financing. Among other things, our lenders may seek to increase interest rates, enact tighter lending standards, refuse to refinance existing debt at maturity at favorable terms or at all and may reduce or cease to provide funding to us. Additionally, extended lead times for newly fabricated equipment can increase near-term capital needs and create timing inconsistency between funding availability and capital expenditures. If we are unable to access the capital and credit markets on favorable terms, or if we are not successful in raising capital within the time period required or at all, we may not be able to grow or maintain our business, which could have a material adverse effect on our business, results of operations and financial condition.

The erosion of the financial condition of our customers could adversely affect our business.business, results of operations, financial condition and cash flows.

Many of our customers finance their exploration and production activities through cash flow from operations, the incurrence of debt or the issuance of equity. During times when the oil or natural gas markets weaken, our customers are more likely to experience a downturn in their financial condition. Additionally, some of our midstream customers may provide their gathering, transportation and related services to a limited number of companies in the oil and gas production business. A reduction in borrowing bases under reserve–basedreserve-based credit facilities, the lack of availability of debt or equity financing or other factors that negatively impact our customers’ financial condition could result in a reduction in our customers’ spending for our products and services, which may result in their cancellation of contracts, the cancellation or delay of scheduled maintenance of their existing natural gas compression equipment, their determination not to enter into new natural gas compression service contracts or their determination to cancel or delay orders for our services. Furthermore, the loss by our midstream customers of their key customers could reduce demand for their services and result in a deterioration of their financial condition, which would in turn decrease their demand for our services. Any such action by our customers would reduce demand for our services. Reduced demand for our services could adversely affect our business, results of operations, financial condition and cash flows. In addition, in the event of the financial failure of a customer, we could experience a loss on all or a portion of our outstanding accounts receivable associated with that customer.

Our five most significant customers collectively accounted for 35%, 33%35% and 32%33% of our revenues during the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively. Our services are provided to these customers pursuant to contract operations service agreements, which generally have an initial term of 12 to 36 months, or generally up to 60 months for the largest horsepower units in our fleet, and continue thereafter until terminated by either party with 30 days’ advance notice. The loss of all or even a portion of the services we provide to these customers, as a result of competition or otherwise, could have a material adverse effect on our business, results of operations and financial condition.

Many of our contract operations service agreements have short initial terms and are cancelable on short notice after the initial term, and we cannot be sure that such contracts will be extended or renewed after the end of the initial contractual term. Any such non renewals,non-renewals, or renewals at reduced rates or the loss of contracts with any significant customer could adversely impact our business, results of operations.operations, financial condition and cash flows.

The length of our contract operations service agreements with customers varies based on operating conditions and customer needs. Our initial contract terms typically are not long enough to enable us to recoup the cost of the equipment we utilize to provide contract operations services, and these contracts are typically cancelable on short notice after the initial term. We cannot be sure that a substantial number of these contracts will be extended or renewed by our customers or that any of our customers will continue to contract with us. The inability to negotiate extensions or renew a substantial portion of our contract operations services contracts, the renewal of such contracts at reduced rates, the inability to contract for additional services with our customers or the loss of all or a significant portion of our services contracts with any significant customer could lead to a reduction in revenue and net income and could require us to record asset impairments. Moreover, we have limited ability to increase prices during our initial contract terms. As a result, we are unable to pass increases in the prices of the equipment, materials and services we utilize to provide contract operations services, as a result of inflationinflation, oftariffs, or otherwise, onto our customers, which could result in a reduction in net income. This could have a material adverse effect upon our business, results of operations, financial condition and cash flows.

We depend on particular suppliers and are vulnerable to product shortages and price increases. With respect to our suppliers of newly–fabricated compression equipment specifically, we occasionally experience long lead times, and therefore may at times make purchases in anticipation of future business. If we are unable to purchase compression equipment or other integral equipment, materials and services from third-party suppliers, we may be unable to retain existing customers or compete for new customers, which could have a material adverse effect on our business, results of operationsoperations, financial condition and financialcash condition.flows.

Some equipment, materials and services used in our business are obtained from a limited group of suppliers. Our reliance on these suppliers involves several risks, including price increases (as a result of inflationinflation, tariffs or otherwise), inferior quality and a potential inability to obtain an adequate supply of such equipment, materials and services in a timely manner. Additionally, we occasionally experience long lead times from our suppliers of newly–fabricated compression equipment and may at times make purchases in anticipation of future business. We do not have long–term contracts with some of these suppliers, and the partial or complete loss of certain of these suppliers could have a negative impact on our results of operations and could damage our customer relationships.

If we are unable to purchase compression equipment, in particular, on a timely basis to meet the demands of our customers, our existing customers may terminate their contractual relationships with us, or we may not be able to compete for business from new or existing customers, which, in each case, could have a material adverse effect on our business, results of operations and financial condition. Further, supply chain bottlenecks could adversely affect our ability to obtain necessary materials, parts or lube oil used in our operations or increase the costs of such items. A significant increase in the price of such equipment, materials and services, as a result of inflation, tariffs or other factors, could have a negative impact on our business, results of operations, financial condition and cash flows.

We may not realize the intended benefits of our process and technology transformation project, which could have an adverse effect on our business.business, results of operations and financial condition.

BetweenWe 2019utilize technology in all aspects of our business to drive operational efficiencies and 2021,enhance weour investedvalue inproposition ato processour customers. Our investments have focused on implementing cloud-based solutions to replace legacy systems, the automation of workflows, integration of digital and technologymobile transformationtools project that replacedfor our existingfield ERP,service supply chain and inventory management systemstechnicians and expanded the remote monitoring capabilities of our compression fleet. Beginning in 2023, our focus shifted to fully harnessing these technologies across our business. We expect the technological transformations to lower our internal costs and improve our profitability over time. However, theThe implementation of the process and technology transformation project has required significant capital and other resources from which we may not realize the benefits we expect to realize. Any such difficulties could have an adverse effect on our business, results of operations and financial condition.

Threats of cyber-attacksCyber-attacks or terrorism could affect our business.business, results of operations and our reputation.

We rely on our information technology systems and data for critical operations. We own and manage some of these technology systems, but also rely on the systems provided by a host of third-party service providers, vendors, and business partners. We and certain of our third-party providers collect, maintain and process data about customers, employees, business partners and others, including personally identifiable information, as well as proprietary information belonging to our business, such as trade secrets. We are subject to numerous and evolving cybersecurity risks and threats, including cyber-attacks, computer viruses and terrorism that threaten the confidentiality, integrity and availability of critical technology systems or information and may disrupt our operations and harm our operating results. Our industry requires the continued operation of sophisticated information technology systems and network infrastructure. Any integration of artificial intelligenceAI in our or relevant third parties’ operations, products or services is expected to pose new and/or unknown cybersecurity risks and challenges. In addition, we have acquired and may continue to acquire companies with cybersecurity vulnerabilities and/or unsophisticated security measures, which exposes us to significant cybersecurity, operational, and financial risks.

Despite our implementation of security measures, our technology systems and data are vulnerable to material compromises, disruption and failures due to social engineering/phishing, malware (including ransomware), malfeasance by insiders, human or technological error, hacking, viruses, and as a result of bugs, misconfigurations or exploited vulnerabilities in software or hardware, acts of war or terrorism and other causes. Given the complexity of our technology systems, which includes operational technology deployed in the field, we are unable to comprehensively identify, patch or mitigate against all security vulnerabilities. In addition, a successful cyberattack against a critical third party could materially impact our operations and financial results, and because we cannot control the scope or effectiveness of the security measures deployed by our third-party suppliers and service providers, such as cloud services that support our internal and customer-facing operations, successful cyberattacks that disrupt or result in unauthorized access to third-party technology systems can materially impact our operations and financial results. We and certain of our third-party providers have experienced cyberattacks and other incidents, and we expect such attacks and incidents to occur in the future. While to date no incidents have had any material operational or financial impact, we cannot guarantee that material incidents will not occur in the future.

Cyberattacks are expected to accelerate on a global basis in frequency and magnitude as threat actors are increasingly sophisticated in using techniques and tools, including generative and other artificial intelligence,AI, that circumvent security controls, evade detection and remove forensic evidence. As a result, there is no guarantee that we will detect, investigate, remediate or recover from future attacks or incidents, or avoid a material adverse impact to our systems or information. There also can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information. If our information technology systems were to fail and we were unable to recover in a timely way, we may be unable to fulfill critical business functions, which could have a material adverse effect on our business, results of operations and financial condition.

The nature of our industry and assets makes us a target for terrorist activities designed to disrupt our ability to service our customers. Increased cybersecurity regulations and an escalating cyber terrorist threat environment are expected to require additional investments in security that we cannot currently predict. We are also subject to evolving cybersecurity and data privacy laws and regulations that are increasingly complex. Failure to comply with these laws and regulations could result in significant legal liability, regulatory investigations and penalties, or harm to our reputation in the marketplace. The implementation of security guidelinesrequirements and measures and the maintenance of insurance, to the extent available, addressing such activities could significantly increase costs. We cannot guarantee that any costs and liabilities incurred in relation to an attack or incidentincident, such as lost business, penalties or damages, will be covered by our existing insurance policies or that applicable insurance will be available to us in the future on economically reasonable terms or at all. These types of events could materially adversely affect our business and results of operations. In addition, these types of events could require significant management attention and resources and could adversely affect our reputation among customers and the public.

Tax–relatedTax-related Risks

Our ability to use any NOLs and interest expense limitation carryovers generated by us could be substantially limited if we were to experience an “ownership change” as defined under Section 382 of the Code. In general, an “ownership change” would occur if our “5–percent5-percent stockholders,” as defined under Section 382 of the Code, including certain groups of persons treated as “5–percent5-percent stockholders,” collectively increased their ownership in us by more than 50 percentage points over a rolling three–yearthree-year period. An ownership change can occur as a result of a public offering of our common stock, as well as through secondary market purchases of our common stock and certain types of reorganization transactions. We have experienced ownership changes, which may result in an annual limitation on the use of our pre–ownership change NOLs (and certain other losses and/or credits) equal to the equity value of our stock immediately before the ownership change, multiplied by the long–termlong-term tax–exempttax-exempt rate for the month in which the ownership change occurred. During the year ended December 31, 2019, the IRS proposed regulations that would prevent us from using unrealized built–inbuilt-in gains to increase this limitation. If these regulations were finalized and we experienced an ownership change our ability to use our NOLs (and certain other losses and/or credits) may be limited. Such a limitation could, for any given year, have the effect of increasing the amount of our U.S. federal and state income tax liability, which would negatively impact the amount of after–tax cash available for distribution to our stockholders and our financial condition.

From time to time, we are subject to various claims, tax audits, litigation and other proceedings that could ultimately be resolved against us and require material future cash payments or charges, which could impair our financial condition orcondition, results of operations.operations or cash flows.

OnIn March 8, 2024, the EPA published even more stringent rules with respect to methane and VOC for new and existing sources, via NSPS Subparts OOOOb and OOOOc, with the OOOOb rules for sources constructed, modified, or reconstructed after December 6, 2022, which became effective on May 7, 2024. The OOOOc rules for existing sources givesgive the States a two-year deadline to develop and submit to EPA plans for addressing emissions from those sources. However, EPA issued a direct interim final rule in July 2025 and a final rule in December 2025 that pushed the substantive deadlines in OOOOb and OOOOc back to January 2027. EPA has also been working on a proposed rule to roll back significant portions of the OOOOb and OOOOc, which rule proposal is in interagency review at the White House Office of Management and Budget and is expected for publication soon.

OnIn April 10, 2024, BoLM published a separate final rule, known as the “Waste Prevention, Production Subject to Royalties, and Resource Conservation” rule, to address methane emissions from oil and gas activities on public lands, which became effective on June 10, 2024. The rule is currently stayed pending litigation in North Dakota, Texas, Montana, Wyoming, and Utah. Among the newly adopted methane requirements that may impact our operations are broader applicability to compression equipment relative to the existing rules, increased work practices and inspection requirements and mandates for certain new zero–emissionszero-emissions equipment. Notably, however, in November 2025, BoLM announced that it will not enforce requirements of the rule that carried a December 10, 2025 deadline until December 10, 2026.

Meanwhile, several states — including, most notably, New Mexico and Colorado — have continued to develop their own more stringent methane rules that will or are anticipated to impose additional requirements on the industry. For example, Colorado’s Air Quality Control Commission adopted the “Midstream Rule” on December 20, 2024, to address GHG emissions from midstream oil and gas operations, including from natural gas compressor stations. Under the Midstream Rule, midstream facilities mustwere required to begin taking steps to reduce GHG emissions from combustion fuel equipment by February 14, 2025.2025, and are required to meet certain GHG emissions limits by the end of 2030. The Midstream Rule is subject to ongoing judicial challenges.

We do not believe that these rules will have a material adverse impact on our business, financial condition, results of operations or cash flows, but we cannot yet definitively predict the impact of any revision of the current rules or issuance of new rules, whichthe impact of which could be material.

OnIn October 1, 2015, the EPA issued a new NAAQS ozone standard of 70 ppb, which is a tightening from the 75-ppb standard set in 2008. This new standard became effective on December 28, 2015, and the EPA completed designating attainment/non–attainment regions under the revised ozone standard in 2018. In November 2016, the EPA proposed an implementation rule for the 2015 NAAQS ozone standard, but the agency has yet to issue a final implementation rule. State implementation of the revised NAAQS could result in stricter permitting requirements, delay or prohibit our customers’ ability to obtain such permits and result in increased expenditures for pollution control equipment, the costs of which could be significant. By law, the EPA must review each NAAQS every five years. In December 2018 and again in December 2020, the EPA announced that it was retaining without revision the 2015 NAAQS ozone standard. In June 2021, the EPA commenced a process for reconsidering the December 2020 decision. In August 2023, the EPA announced a new review of the ozone NAAQS and most recently released reports on December 23, 2024, related to its review. We do not believe continued implementation of the NAAQS ozone standard will have a material adverse impact on our business, financial condition, results of operations or cash flows, but we cannot yet predict the impact, if any, of any new Federal Implementation Plan involving new NAAQS standards.

Environmental laws and regulations may, in certain circumstances, impose strict liability for environmental contamination, which may render us liable for remediation costs, natural resource damages and other damages as a result of our conduct that was lawful at the time it occurred or the conduct of, or conditions caused by, prior owners or operators or other third parties. In addition, where contamination may be present, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury, property damage and recovery of response costs. Remediation costs and other damages arising as a result of environmental laws and regulations, and costs associated with new information, changes in existing environmental laws and regulations or the adoption of new environmental laws and regulations could be substantial and could negatively impact our financial condition, profitability and results of operations. Moreover, failure to comply with these environmental laws and regulations,regulations may result in the imposition of administrative, civil and criminal penalties and the issuance of injunctions delaying or prohibiting operations.

Congress and various federal and state legislative and regulatory bodies have previously considered legislation to restrict or regulate emissions of GHG. Energy legislation and other initiatives continue to be proposed that may be relevant to GHG emissions issues. For example, the SEC adopted rules in March 2024 that would, if the rules survive legal challenge, mandate extensive disclosure for certain public companies of climate-related data, risks and opportunities, including financial impacts, physical and transition risks, related governance and strategy, and greenhouse gas emissions. Almost half of the states, either individually or through multi–state regional initiatives, have begun to address GHG emissions, primarily through the planned development of emission inventories or regional GHG cap and trade programs. Various states, such as California, Colorado and New York have passed or proposed similar climate change disclosure laws. Although most of the state–level initiatives have to date been focused on large sources of GHG emissions, such as electric power plants, it is possible that smaller sources such as our natural gas–powered compressors could become subject to GHG–related regulation. Depending on the particular program, we could be required to control emissions or to purchase and surrender allowances for GHG emissions resulting from our operations. Our customers or other business partners may require us to provide additional climate-related information if they are also subject to these or additional climate-related disclosure laws or regulations. These actions could result in increased (i) costs to operate and maintain our facilities, (ii) capital expenditures to install new emission controls on our facilities, and (iii) costs to administer and manage any potential GHG emissions regulations or carbon trading or tax programs. Such climate-related disclosure requirements could result in increased compliance costs, and possible litigation and reputational risks if such disclosures are incomplete, inaccurate, misleading or do not otherwise meet the expectations of our stakeholders. Moreover, such requirements may not always be uniform across jurisdictions, which may result in increased complexity and cost for compliance. In addition, we may take voluntary steps to mitigate any impact our operations might have on climate change. As a result, we may experience increases in energy, transportation and raw material costs, capital expenditures or insurance premiums; however, there is no guarantee that such efforts will have the desired effects.

The $1 trillion legislative infrastructure package passed by Congress in November 2021 includesincluded a number of climate-focused spending initiatives targeted at climate resilience, enhanced response and preparation for extreme weather events, and clean energy and transportation investments. Significant additional legislative action by Congress also occurred in August 2022 with the Inflation Reduction Act, signed into law by the former administration, which providesprovided $391 billion in funding for research and development and incentives for low-carbon energy production methods, carbon capture, and other programs directed at encouraging de-carbonization and addressing climate change. The IRA also amendsamended the Clean Air Act to include a Methane Emissions and Waste Reduction Incentive Program for petroleum and natural gas systems. This program requiresrequired the EPA to impose a “waste emissions charge” on certain natural gas and oil sources that arewere already required to report under EPA’s GHG Reporting Program. In November 2024, the EPA released its final rule to implement the methane emissions fee with an effective date in January 2025, which iswas expected to apply to reporting year 2024 emissions. Twenty-three states have filed a lawsuit challenging the rule, and the change in U.S. presidential administration provides additional uncertainty as to the rule’s future. While the current administration has issued an executive order pausing the disbursement of all unspent funds appropriated through the IRA and has already begun to rollrolling back these environmental policies implemented during the former administration, with legislative action culminating in the One Big Beautiful Bill Act, which eliminated most of the Inflation Reduction Act’s incentives and delayed the commencement of the methane waste emissions charge on oil and gas sources by a decade to 2034. Notably, Congress eliminated EPA’s regulations in support of the waste emissions charge using the Congressional Review Act effective on March 14, 2025 and, as of September 12, 2025, EPA has proposed to suspend the GHG Reporting Program for oil and gas sources until 2034 and to eliminate such reporting for all other sources. U.S. climate leaders have vowed to continue protectingpressing and building onfor climate progress.progress although major new climate legislation seems unlikely in the immediate future. Such legislation, regulations, and initiatives, as well as uncertainty regarding the future success of such regulations and initiatives in reducing demand for oil and gas, could indirectly affect our business and our results of operations by reducing demand for our services.

Separately, the EPA has promulgated regulations controlling GHG emissions under its existing CAA authority. The EPA has adopted rules requiring many facilities, including petroleum and natural gas systems, to inventory and report their GHG emissions. As noted above, in September 2025, EPA proposed to suspend those requirements until 2034. In 2024,2025, we did not operate any facilities that were subject to these reporting obligations. In addition, the EPA rules provide air permitting requirements for certain large sources of GHG emissions. The requirement for large sources of GHG emissions to obtain and comply with permits will affect some of our and our customers’ largest new or modified facilities going forward but is not expected to cause us to incur material costs. As noted above, the EPA has previously undertaken efforts to regulate emissions of methane, considered a GHG, in the oil and gas sector, and could develop additional, more stringent rules at some point in the future.

At the international level, the U.S. joined the international community at the 21st COP of the UNFCCC in Paris, France, which resulted in the “Paris Agreement,” which intended for signatory countries to nationally determine their contributions and set GHG emission reduction goals every five years beginning in 2020. While the Paris Agreement did not impose direct requirements on emitters, national plans to meet its pledge resulted in new regulatory requirements. After withdrawing from the Paris Agreement in November 2020, the U.S. re-entered the Paris Agreement in April 2021 along with a new “nationally determined contribution” that the U.S. would achieve GHG emissions reductions of at least 50% relative to 2005 levels by 2030. In November 2021, at COP26 in Glasgow, the U.S. and European Union jointly announced the launch of the “Global Methane Pledge,” by which signatory countries aim to cut global methane pollution at least 30% by 2030 relative to 2020 levels, including “all feasible reductions” in the energy sector. The December 2023 COP28 meeting in Dubai reaffirmed commitments to the Paris Agreement and concluded that the world should move away from fossil fuel energy in a just, orderly, and equitable manner and aim to achieve net zero GHG emissions by 2050, while recognizing a transitional role for fossil fuels. In November 2024, at COP29 in Azerbaijan, countries agreed on the final building blocks that set out how carbon markets will operate under the Paris Agreement, among other outcomes that further indicate the global push to mitigate climate change. Given thatHowever, the current administration has issued an executive order in January 2025 that initiated the process to withdraw the U.S. from the Paris Agreement and from any commitments made under the UNFCCC,UNFCCC. however,COP30 ittook remainsplace toin beBrazil seenin whichNovember of2025 thesewith aforementionedno official participation or representatives attending from the U.S. commitmentsIn willJanuary survive2026, inthe 2025U.S. andofficially beyond.withdrew from the Paris Agreement. Just as we cannot fully anticipate the impact of the methane rules discussed above, we also cannot predict whether the withdrawal from or potential future re-entry, or pending withdrawal from,re-entry into the Paris Agreement or other international pledges will result in any particular new federal regulatory requirements or whether such requirements will cause us to incur material costs. Nevertheless, several states and geographic regions in the U.S. have adopted legislation and regulations to reduce emissions of GHGs, including cap and trade regimes and commitments tothat contribute to meeting the goals of the Paris Agreement.

Increasingly, parties have sought to bring suit against various natural gas and oil companies alleging that the companies have been aware of the adverse effects of climate change but defrauded their investors or customers by failing to adequately disclose those impacts. Any such litigation targeting our customers could negatively impact their operationoperations and, in turn, decrease demand for our operations, which could have an adverse impact on our financial condition.

Supply and demand for oil and natural gas is dependent upon a variety of factors, many of which are beyond our control. These factors include, among others, the potential adoption of new government regulations, including those related to fuel conservation measures and climate change regulations, technological advances in fuel economy and energy generation devices. For example, legislative, regulatory or executive actions intended to reduce emissions of GHG could increase the cost of consuming crude oil and natural gas, thereby potentially causing a reduction in the demand for such products. A broader transition to alternative fuels or energy sources, whether resulting from potential new government regulation, carbon taxes or consumer preferences could result in decreased demand for crude oil, natural gas and NGLs. In addition, increased focus of our customers on reducing emissions from, or the use of, combustion engines in compression could increase demand for electric compressors or require us to make modifications to our existing natural gas-powered units. Any decrease in demand for these products could consequently reduce demand for our services and could have a negative effect on our business.

Also, recent activism directed at shifting funding away from companies with fossil fuel energy-related assets could result in a reduction of funding for the energy sector overall. As of September 2024, 86Numerous climate lawsuits have been filed against the world’s largest oil, gas, and coal producing corporations, with the number of cases filed against fossil fuel companies each year nearly tripling since the Paris Agreement was reached in 2025.2015. Such actions could adversely impact our business by distracting management and other personnel from their primary responsibilities, require us to incur increased costs, and/or result in reputational harm. Moreover, any such litigation targeting our customers could negatively impact their operationoperations and, in turn, decrease demand for our services. Such shareholder activism in relation to environmental, social and governance matters could have an adverse effect on our ability to obtain external financing as well as negatively affect the cost of, and terms for, financing to fund capital expenditures or other aspects of our business. Attention to climate change and other ESG risks has also resulted in governmental investigations and public and private litigation, which could increase our costs or otherwise adversely affect our business.

Our operations, projects and growth opportunities require us to have strong relationships with various key stakeholders, including our shareholders, employees, suppliers, customers, local communities and others. We may face pressures from stakeholders, many of whom may be concerned by on climate change, to prioritize sustainable energy practices, reduce our carbon footprint and promote sustainability while at the same time remaining a successfully operating public company. If we do not successfully manage expectations across these varied stakeholder interests, it could erode our stakeholder trust and thereby affect our brand and reputation. The lack of an established single approach to identifying, measuring, and reporting on many ESG matters may further create uncertainty and ambiguities. Failure to realize or timely achieve progress on such aspirational goals, targets, cost estimates, and other expectations or assumptions may adversely impact us. Unfavorable ESG ratings could also lead to further increased negative sentiment towards us, our customers, and our industry, negatively impacting us and our access to and costs of capital. Such erosion of confidence could negatively impact our business through decreased demand and growth opportunities, delays in projects, increased legal action and regulatory oversight, adverse press coverage and other adverse public statements, difficulty hiring and retaining top talent, difficulty obtaining necessary approvals and permits from governments and regulatory agencies on a timely basis and on acceptable terms, and difficulty securing investors and access to capital. The occurrence of any of the foregoing could have a material adverse effect on our business and financial condition.

This section primarily discusses 20242025 and 20232024 items and comparisons between these years. For a discussion of changes from 20222023 to 20232024 and other financial information related to 2023,2024, refer to Part II, Item 7. “Manag Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10–K for the year ended December 31, 20232024 filed with the SEC on February 21,25, 2024.2025.

We are an energy infrastructure company with a primary focus on midstream natural gas compression and a commitment to helping our customers produce, compress and transport natural gas in a safe and environmentally responsible way. We are a premier provider of natural gas compression servicesservices, in terms of total compression fleet horsepower, to customers in the energy industry throughout the U.S., and a leading supplier of aftermarket services to customers that own compression equipment in the U.S. We operate in two business segments: contract operations and aftermarket services. Our contract operations servicesbusiness primarily includeincludes designing, sourcing, owning, installing, operating, servicing, repairing and maintaining our owned fleet of natural gas compression equipment to provide natural gas compression services to our customers. In ourOur aftermarket services business,business weprovides sella partsfull andrange componentsof andservices provideto support the compression needs of our customers that own compression equipment, including operations, maintenance, overhaul and reconfiguration services toand customerssales whoof ownparts compressionand equipment.components.

On AugustMay 30,1, 2024,2025, we completed the TOPSNGCS AcquisitionAcquisition, whereby we acquired all of the issued and outstanding equity interests in TOPS,NGCS, including a fleet of approximately 580,000326,000 operating horsepower and an 18,000 horsepower backlog of contracted new equipment, for aggregate total consideration consisting of $868.7$349.4 million. Total consideration consisted of $296.5 million in cashcash, of which we paid $265.1 million to NGCSI sellers and $31.4 million to NGCSE sellers, and approximately 6.92.3 million shares of common stock issued to NGCSE sellers with an NGCS acquisition date fair value of $139.1$53.0 million. The cash portion of the purchase price was funded with proceeds from the July 2024 Equity Offering, the 2032 Notes offering and borrowings under the Credit Facility. See Note 4 (“Business Transactions”) for further details.

During 2024,2025, U.S. natural gas and oil production grew to record levels, resulting in strong demand for our compression services. In response, we increased our investment in new large horsepower fleet units and expanded our fleet through the TOPSNGCS Acquisition. Our contract operations revenue and period-end total operating horsepower increased 21%30% and 17%,8%, respectivelyrespectively, in 2024.2025.

The EIA Outlook expects natural gas production to continue to increase to all-time highs in 20252026 and 2026.2027. Natural gas consumption is expected to be largely consistent with 2024,2025, reflecting consistent usage of natural gas in the electric power generation and residential sectors,sector, as well as increased LNG exports and exports of natural gas via pipeline to Mexico.Mexico, offset by lower industrial, residential, and commercial demand.

We believe the outlook for the energy industry in the U.S. is positive. While we anticipate that the combination of commoditynatural gas prices and demand may likely have a positive impact on activity levels in both the upstream and midstream sectors, we cannot predict the ultimate magnitude of that impact on our business and expect it to be varied across our operations, depending on the region, customer, nature of our services, contract term and other factors. However, we continue to believe that overall the long–term demand for our compression services will continue given the necessity of compression in facilitating the transportation and processing of natural gas.

Cost Management. In order to improve our operations and further reduce operating expenses, we invested and continue to invest significant resources into a process and technology transformation project that has, among other things, replacedenhanced ourcertain former ERP,technology, supply chain and inventory management systemssystems, replaced network infrastructure and expanded the remote monitoring capabilities of our compression fleet. Cost management continues to be challenging, however, and there is no guarantee that our efforts will result in a reduction in our operating expenses. Natural gas production growth and resulting demand for our services could cause us to experience increased operating expenses as we hire employees and incur additional expenses needed to support the rebound in market demand.

Further, we depend on suppliers for the materials, parts, equipment and lube oil necessary to our operations, which exposes us to volatility in prices. Significant price increases for these inputsinputs, as a result of inflation, tariffs, or otherwise, could adversely affect our operating profits. Supply chain disruptions could also adversely affect our ability to obtain, or increase the cost of, such items. While we generally attempt to mitigate the impact of increased prices through strategic purchasing decisions, diversification of our supplier base, where possible, and the passing along of increased costs to customers, there may be a time delay between the increased commodity prices and the ability to increase the price of our services.

Capital RequirementsRequirements, Availability of Capital Equipment and the Availability of External Sources of Capital. We funded a significant portion of our capital expendituresexpenditures, the NGCS Acquisition and the TOPS Acquisition with proceeds from the July 2024 Equity Offering and the 20322027 Notes offeringRedemption andwith borrowings under the Credit Facility. CurrentWhile conditionswe couldhave limitsuccessfully raised capital historically, and most recently in January 2026 with the issuance of the 2034 Notes, there is no guarantee in our ability to access the debt and equity markets to raise capital on affordable terms in 20252026 and beyond. Additionally, extended lead times for newly fabricated equipment can increase near-term capital needs and create timing inconsistency between funding availability and capital expenditures. If we are not successful in raising capital within the time period required or at all, we may not be able to fund these capital expenditures or acquisitions, which could impair our ability to grow or maintain our business.

Demand for natural gas-powered compression. Demand for our services is dependent on the demand for natural gas in the markets we serve. Although the EIA currently forecasts natural gas demand will grow through 2050, technological advances and accelerated adoption of renewable sources of energy could reduce demand for natural gas in our markets and have an adverse effect on our business. In addition, increased focus of our customers on reducing emissions from, or the use of, combustion engines in compression could increase demand for electric motor-driven compressors or require us to make modifications to our existing natural gas-powered units.

(3) Defined as average of period end horsepower that is operating under contract and horsepower that is idle but under contract and generating revenue such as standby revenue, including operating horsepower asfor ofthe compressors acquired in the NGCS Acquisition beginning May 1, 2025 through December 31, 2025 and for the compressors acquired in the TOPS Acquisition beginning September 30, 2024 through December 31, 2024 for compressors acquired in the TOPS Acquisition.2025.

We define adjusted gross margin as total revenue less cost of sales, exclusive of depreciation and amortization. Adjusted gross margin is included as a supplemental disclosure because it is a primary measure used by our management to evaluate the results of revenue and cost of sales, exclusive of depreciation and amortization, which are key components of our operations. We believe adjusted gross margin is important because it focuses on the current operating performance of our operations and excludes the impact of the prior historical costs of the assets acquired or constructed that are utilized in those operations, the indirect costs associated with our SG&A activities, our financing methods and income taxes. In addition, depreciation and amortization may not accurately reflect the costs required to maintain and replenish the operational usage of our assets and therefore may not portray the costs of current operating activity. As an indicator of our operating performance, adjusted gross margin should not be considered an alternative to, or more meaningful than, gross margin, net income (loss) or any other measure presented in accordance with GAAP. Our adjusted gross margin may not be comparable to a similarly titled measure of other entities because other entities may not calculate adjusted gross margin in the same manner.

Adjusted gross margin has certain material limitations associated with its use as compared to net income. These limitations are primarily due to the exclusion of SG&A, depreciation and amortization, long-lived and other asset impairments,impairment, restructuring charges, debt extinguishment loss, interest expense, transaction-related costs, gain on sale of assets, net, other expenseexpense, (income), net andnet, provision for income taxes.taxes and equity in net loss of unconsolidated affiliate. Because we intend to finance a portion of our operations through borrowings, interest expense is a necessary element of our costs and our ability to generate revenue. Additionally, because we use capital assets, depreciation expense is a necessary element of our costs and our ability to generate revenuerevenue, and SG&A is necessary to support our operations and required corporate activities. To compensate for these limitations, management uses this non-GAAP measure as a supplemental measure to other GAAP results to provide a more complete understanding of our performance.

The following table reconciles adjusted gross margin to adjusted gross margin, its most directly comparable to GAAP measure:

Revenue was $1,157.6$1,489.8 million and $990.3$1,157.6 million during the years ended December 31, 20242025 and 2023,2024, respectively. The increase in revenue was primarily due to increased revenue from our contract operations business and aftermarket services business. See “Contract Operations” and “Aftermarket Services” below for further details.

Net income was $172.2$322.3 million and $105.0$172.2 million during the years ended December 31, 20242025 and 2023,2024, respectively. The increase was primarily driven by higher adjusted gross margin from both our contract operations business and higheraftermarket services business, as well as an increase in gain on sale of assets,assets net.and a reduction in debt extinguishment loss. These increases were partially offset by increases in depreciation and amortization, interest expense, provision for income taxes, SG&A, transaction-related costs, interest expenseA and debtlong-lived extinguishmentand loss.other asset impairment.

Revenue in our contract operations business increased approximately $105.6$291.7 millionmillion, due primarily to the compression units acquired in the TOPS Acquisition and in the NGCS Acquisition, higher rates and an increase in average operating horsepower, as well as an increase of $65.5 million due to the compression units acquired in the TOPS Acquisition.horsepower.

The increase in cost of sales, exclusive of depreciation and amortization, was primarily due to a $17.9$37.3 million increase in employee compensation, including the addition of headcount from the TOPS Acquisition and the NGCS Acquisition, and a $4.1$17.1 million increase in parts expense,expense adue $1.4to millioncompression units acquired in the TOPS Acquisition and the NGCS Acquisition, as well as an increase in autooperating expensehorsepower. andThese aincreases $1.3 million increase in local and miscellaneous taxes. This increase waswere partially offset by a decreasenet benefit of $6.6$35.0 million in startup expenses resulting from average horsepower utilization for the fleet at record levels as wella asresult fewerof unitcertain stopssales and use tax audit settlements and credits and a decrease of $2.9$3.1 million in lube oil expenses mainly due to lower prices.

Revenue in our aftermarket services business decreasedincreased primarily due to lower parts sales, which was partially offset by increased service activity driven by higher customer demand, and an increase in maintenance service contracts.contracts and higher parts sales, including the non-recurring sale of overhauled engines.

The increases in adjusted gross margin and adjusted gross margin percentage were mainly due to a reductionincrease in cost of sales, exclusive of depreciation and amortization, duewas todriven aby differenceincreased activity, including differences in the scope, timing and type of services performed, including additional work associated with maintenance service contracts, which outpaced the decline in overall revenue.performed.

Selling, general and administrative. The increase in SG&A was primarily driven by a $17.2$8.0 million increase in employee incentivecompensation and other compensationbenefits expense, a $2.4$2.0 million increase in professional and consulting fees, a $0.8$1.7 million increase in networkinformation andtechnology computer-related costsexpense and a $0.7$1.4 million increase in insurance expense. These increases were partially offset by a $4.9 million decrease in long-term performance-based incentive compensation expense.

Depreciation and amortization. The increase in depreciation and amortization was primarily due to fixed assets additions, including $15.8 million depreciation and amortization associated with the compression units and intangible assets acquired in the TOPS Acquisition,Acquisition and acceleratedthe depreciationNGCS associated with certain assets.Acquisition. The increase was partially offset by a decrease in depreciation associated with assets reaching the end of their depreciable lives,lives theas impactwell ofas compression and other asset sales, and long-lived asset impairments.sales.

Long–lived and other asset impairment. We periodically review the future deployment of our idle compressors for units that are not of the type, configuration, condition, make or model that are cost efficient to maintain and operate. We also evaluate for impairment our idle units that have been culled from our compression fleet in prior years and are available for sale. During the years ended December 31, 2024 and 2023, we recognized $10.7 million and $12.0 million, respectively, of impairment charges to write down these compressors to their fair value. The decrease in impairment charges on compressors is due to an increase in customer demand and as a result, higher utilization of our equipment. See Note 2221 (“Long-Lived Asset and Other ImpairmentsImpairment”) for further details on these impairment charges.details. The following table presents the results of our compression fleet impairment review, as recorded in our contract operations segment:

Restructuring charges. Restructuring charges of $1.8$1.6 million during the year ended December 31, 20232025 consisted of severance and consultingproperty costsdisposal relatedas towell ouras restructuringconsolidation activities.and closure costs. See Note 2322 (“Restructuring Charges”) for further details on these restructuring charges.details.

Debt extinguishment loss. We incurred $3.2$0.9 million of debt extinguishment loss during the year ended December 31, 2025 as a result of the 2027 Notes Redemption compared to $3.2 million during the year ended December 31, 2024 as a result of the 2027 Notes Tender Offer.

Interest expense. The increase in interest expense was primarily due to a higher average outstanding balance of long-term debt primarily due to the 2032 Notes offering,and anborrowings increaseunder in the outstanding balance on theour Credit Facility to fund cash consideration of the TOPS Acquisition and higherthe interestNGCS rates.Acquisition. These increases were partially offset by the 2027 Notes Redemption, the 2027 Notes Tender Offer and the write-off of $1.0 million of unamortized deferred financing costs as a resultdecrease ofin the Amendedweighted andaverage Restatedeffective Creditinterest Agreement during the year ended December 31, 2023.rate.

Transaction-related costs. We incurred $13.2$9.1 million of professional fees, compensation-relatedcompensation and other costs related to the NGCS Acquisition during the year ended December 31, 20242025, and we incurred $3.6 million and $13.2 million of professional fees, compensation and other costs related to the TOPS Acquisition.Acquisition during the years ended December 31, 2025 and 2024, respectively. See Note 4 (“Business Transactions”) for further details on these transaction-related costs.details.

Other expense, net. The increasedecrease in other expense, net was primarily due to an increase in proceeds from insurance and other settlements and a $0.5 million increasedecrease in unrealized change in the fair value of our investment in an unconsolidated affiliate recognized during the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024. These changes were partially offset by a limited liability agreement amendment fee of $3.6 million paid to FGC Holdco, see Note 27 (“Related Party Transactions”) for further details.

The increase in provision for income taxes was primarily due to the tax effect of the increase in book income and the limitation on executive compensation offset by the benefit from equity-settled long-term incentive compensation during the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024.

Our ability to fund operations, finance capital expendituresexpenditures, fund share repurchases and pay dividends depends on the levels of our operating cash flows and access to the capital and credit markets. Our primary sources of liquidity are cash flows generated from our operations and our borrowing availability under our Credit Facility. Our cash flow is affected by numerous factors, including prices and demand for our services, oil and natural gas exploration and production spending, conditions in the financial markets and other factors. We have no near-term maturities and believe that our operating cash flows and borrowings under the Credit Facility will be sufficient to meet our future liquidity needs.needs in the next twelve months and beyond.

Maintenance capital expenditures were $87.8$110.7 million and $92.2$87.8 million during the years ended December 31, 20242025 and 2023,2024, respectively. The decreaseincrease in maintenance capital expenditures from 2023 to 2024 was primarily due to lower make–ready investment, as our fleet’s average horsepower utilization reached record levels, and we experienced fewer stops in 2024 compared to 2023. This decrease was partially offset by an increase in scheduled and unscheduled maintenance activities due to maintenance cycle requirements.requirements and the addition of the compression units acquired in the NGCS Acquisition and the TOPS Acquisition, partially offset by lower make–ready investment.

We continue to return capital to stockholders through quarterly dividends and share repurchases. On January 30,29, 2025,2026, our Board of Directors declared a quarterly dividend of $0.19$0.22 per share of common stock, or approximately $33.5 million, which was paid on February 19,18, 20252026 to stockholders of record at the close of business on February 12,10, 2025.2026. Any future determinations to pay cash dividends to our stockholders will be at the discretion of our Board of Directors and will be dependent upon our financial condition, results of operations, and credit and loan agreements in effect at that time and other factors deemed relevant by our Board of Directors. In October 2025, our Board of Directors approved an additional increase to our Share Repurchase Program of $100.0 million through December 31, 2026, and as of December 31, 2025, available capacity under the Share Repurchase Program was $117.7 million. The actual number of shares repurchased will depend on prevailing market conditions, alternative uses of capital and other factors, and will be determined at management’s discretion.

During the years ended December 31, 20242025 and 2023,2024, our Credit Facility had an average daily balance of $315.0$713.8 million and $298.8$315.0 million, respectively. The weighted average annual interest rate on the outstanding balance under the Credit Facility was 6.8%5.8% and 7.7%6.8% at December 31, 20242025 and 2023,2024, respectively. As of December 31, 2024,2025, there were $4.0$3.0 million of letters of credit outstanding under the Credit Facility and the applicable margin on borrowings outstanding was 2.2%. We amended and restated our Credit Facility on May 16, 2023; see Note 16 (“Long-Term Debt”) to our Financial Statements for details on the Amended and Restated Credit Agreement.2.0%.

Credit Facility Terms. Our Credit Facility matures on May 16, 2028 (or December 2, 2026 or December 3, 2027, as applicable,2027 if any portion of our 2027 Senior2028 Notes and 2028 Senior Notes, respectively, remain outstanding at such date) and has an aggregate revolving commitment of $1.1$1.5 billion. Portions of the Credit Facility, up to $110.0 million, are available for the issuance of swing line loans and $50.0 million is available for the issuance of letters of credit. Subject to certain conditions, including approval by the lenders, we are able to increase the aggregate commitments under the Credit Facility by up to an additional $750.0 million. The Credit Facility borrowing base consists of eligible accounts receivable, inventory and compressors.

Covenants. Our Amended and Restated Credit Agreement requires that we meet certain financial ratios (see Note 16 (“Long-Term Debt”)) and contains various additional covenants including, but not limited to, mandatory prepayments from the net cash proceeds of certain asset transfers, restrictions on the use of proceeds from borrowings and limitations on our ability to incur additional indebtedness, engage in transactions with affiliates, merge or consolidate, sell assets, make certain investments and acquisitions, make loans, grant liens, repurchase equity and pay distributions. As of December 31, 2024,2025, we were in compliance with all covenants under our Amended and Restated Credit Agreement. See Note 15 (“Long-Term Debt”) for further details.

On AugustJanuary 26,21, 2024,2026, we completed a private offering of $700.0$800.0 million aggregate principal amount of 6.625%6.0% senior notes due September 20322034 and received net proceeds of $690.0$789.4 million after deducting issuance costs. In connectionJanuary with2026, the offeringapproximately $10.6 million of issuance costs were recorded as deferred financing costs within long-term debt in our consolidated balance sheets and are being amortized to interest expense in our consolidated statement of operations over the term of the 2032notes. Notes,The wenet completedproceeds awere concurrentused cashto tenderrepay offerborrowings ofoutstanding $202.0 million forunder our 2027Credit Notes. See Note 16 (“Long-Term Debt”) for further details.Facility.

Asset Sales. We received proceeds of $67.6$191.8 million and $72.2$67.6 million from asset sales and business dispositions during the years ended December 31, 20242025 and 2023,2024, respectively. We typically use the proceeds from these sales to repay borrowings outstanding under our Credit Facility; however, we are not able to estimate the timing of asset sales or the amount of proceeds to be received and as such, we do not rely on asset sale proceeds as a future source of capital.

There have been no material changes or updates to the risk factors previously disclosed in our 2025 Form 10–K.10-K.

On January 21, 2026, we completed a private offering of $800.0 million aggregate principal amount of 6.0% senior notes due 2034 and received net proceeds of $789.4 million after deducting issuance costs. In January 2026, the approximately $10.6 million of issuance costs were recorded as deferred financing costs within long-term debt in our condensed consolidated balance sheets and are being amortized to interest expense in our condensed consolidated statementstatements of operations over the term of the notes. The net proceeds were used to repay borrowings outstanding under our Credit Facility. See Note 79 (“Long-Term Debt”) for further details.

(1) Defined as idle and operating horsepower. Includes new compressors completed by third partythird-party manufacturers that have been delivered to us.

(3) Defined as average of period end horsepower that is operating under contract and horsepower that is idle but under contract and generating revenue such as standby revenue, including operating horsepower for the compressors acquired in the NGCS Acquisition beginning May 1, 2025.

Non–GAAPNon-GAAP Financial Measures

Adjusted gross margin has certain material limitations associated with its use as compared to net income. These limitations are primarily due to the exclusion of SG&A, depreciation and amortization, long-lived and other asset impairment, restructuring charges, debt extinguishment gain, interest expense, transaction-related costs, gain on sale of assets, net, other income, net, provision for income taxes and equity in net loss of unconsolidated affiliate. Because we intend to finance a portion of our operations through borrowings, interest expense is a necessary element of our costs and our ability to generate revenue. Additionally, because we use capital assets, depreciation expense is a necessary element of our costs and our ability to generate revenue, and SG&A is necessary to support our operations and required corporate activities. To compensate for these limitations, management uses this non-GAAP measure as a supplemental measure to other GAAP results to provide a more complete understanding of our performance.

The reconciliationfollowing oftable reconciles net income to adjusted gross margin is as follows:

Revenue was $373.8$371.2 million and $347.2$383.2 million during the three months ended MarchJune 31,30, 2026 and 2025, respectively. The increase in consolidated revenuedecrease was primarily duedriven toby decreased revenue from our aftermarket services business, partially offset by increased revenue from our contract operations business. See “Contract Operations” and “Aftermarket Services” below for further details.

Net incomeRevenue was $73.8$745.0 million and $70.9$730.3 million during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The increase was primarily driven by higherincreased adjusted gross marginrevenue from our contract operations business, a decrease in transaction-related costs and a higher gain on sale of assets, net. These increases were partially offset by increasesdecreased inrevenue depreciationfrom our aftermarket services business. See “Contract Operations” and amortization,“Aftermarket SG&A,Services” long-lived and other asset impairment and provisionbelow for incomefurther taxes.details.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

Revenue in our contract operations business increased approximately $30.5$10.9 million due primarily to higher rates, an additional month of revenue from the compression units acquired in the NGCS Acquisition asand wellrevenue asfrom higheradditions rates.of horsepower. These increases were partially offset by sales of active horsepower, including the compression units sold in the Flowco Disposition.

The increase in cost of sales, exclusive of depreciationDepreciation and amortization,amortization. wasDepreciation and amortization increased primarily due to afixed $4.0assets millionadditions, increaseincluding in employee compensationdepreciation and benefitsamortization expenseassociated andwith a $1.9 million increase in parts expense due tothe compression units and intangible assets acquired in the NGCS Acquisition. TheseThe increasesincrease werewas partially offset by a decrease in depreciation associated with assets reaching the end of $2.5their milliondepreciable inlives lubeas oilwell expensesas primarilycompression dueand toother lowerasset prices, partially offset by an increase in volumes purchased.sales.

Revenue in our aftermarket services business decreased primarily due to reduced customer demand for major maintenance service activity.activity as well as lower parts sales compared to the six months ended June 30, 2025, which reflected higher parts sales, including the non-recurring sale of overhauled engines.

Selling, general and administrative. SG&A increased for the threesix months ended MarchJune 31,30, 2026 primarily due to higher long-term incentive compensation expense, including a $4.1$6.7 million increase in cash-settled incentive compensation expense as a result of an increase in our stock price and a $3.7$3.2 million acceleration of expense recognition for long-term incentive compensation pursuant to an executive retention agreement, as well as a $1.3$1.4 million increase attributablein toinformation higher employee benefits and compensationtechnology expense. These increases were partially offset by a $2.0$2.8 million decrease in professional fees.

Long-lived and other asset impairment. We periodically review the future deployment of our idle compressors for units that are not of the type, configuration, condition, make or model that are cost efficient to maintain and operate. We also evaluate for impairment our idle units that have been culled from our compression fleet in prior years and are available for sale. The following table presents the results of our compression fleet impairment review, as recorded in our contract operations segment:

Restructuring charges. Restructuring charges of $0.1$0.3 million during the threesix months ended MarchJune 31,30, 2026 consisted of property disposal and closure costs, whereas restructuring charges of $0.7$0.8 million during the threesix months ended MarchJune 31,30, 2025 consisted of severance, property disposal and closure costs. See Note 1214 (“Restructuring Charges”) for further details.

Interest expense. Interest expense increaseddecreased for the threesix months ended MarchJune 31,30, 20262026, primarily due to a higherdecrease in the weighted-average effective interest rate, partially offset by an increase in the average outstanding balance of long-term debt, including the 2034 Notes. This increase was partially offset by the 2027 Notes Redemption and a decrease in the weighted average effective interest rate.debt.

Transaction-related costs. We incurred professional fees, compensation and other costs related to the NGCS Acquisition during the threesix months ended MarchJune 31,30, 2026 and 2025 of $0.3$0.5 million and $2.9$7.6 million, respectively. We incurred compensation and other costs related to the TOPS Acquisition during the threesix months ended MarchJune 31,30, 2026 and 2025 of $0.3$0.5 million and $1.1$2.5 million, respectively. See Note 3 (“Business Transactions”) for further details.

Gain on sale of assets, net. Gain on sale of assets, net increaseddecreased for the threesix months ended MarchJune 31,30, 2026, primarily due to gains of $8.2$7.9 million and $1.9$2.5 million on compression and other asset sales, respectively, compared to gains of $7.1$10.7 million and $0.2$0.9 million on compression and other asset sales, respectively, during the threesix months ended MarchJune 31,30, 2025.

Provision for income taxes increased during the threesix months ended MarchJune 31,30, 20262026, primarily due to the tax effect of the increase in book income and the limitation on executive compensationcompensation, partially offset by the benefit from equity-settled long termlong-term incentive compensation.

Growth capital expenditures were $64.9$115.9 million and $139.4$206.7 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.

Maintenance capital expenditures were $34.0$73.5 million and $22.8$55.2 million during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The increase in maintenance capital expenditures was primarily due to an increase in scheduled and unscheduled maintenance activities due to maintenance cycle requirements and the addition of the compression units acquired in the NGCS Acquisition, partially offset by lower make–ready investment.Acquisition.

We continue to return capital to stockholders through quarterly dividends and share repurchases. On AprilJuly 30,23, 2026, our Board of Directors declared a quarterly dividend of $0.22$0.23 per share of common stockstock, or approximately $40.5 million, to be paid on MayAugust 19,11, 2026 to stockholders of record at the close of business on MayAugust 12,4, 2026. Any future determinations to pay cash dividends to our stockholders will be at the discretion of our Board of Directors and will be dependent upon our financial condition, results of operations and credit and loan agreements in effect at that time and other factors deemed relevant by our Board of Directors. In October 2025, our Board of Directors approved an additional increase to our Share Repurchase Program of $100.0 million through December 31, 2026, and as of MarchJune 31,30, 2026, available capacity under the Share Repurchase Program was $113.2 million. The actual number of shares repurchased will depend on prevailing market conditions, alternative uses of capital and other factors, and will be determined at management’s discretion.

During the threesix months ended MarchJune 31,30, 2026 and 2025, our Credit Facility had an average daily balance of $314.6$596.6 million and $460.6$589.9 million, respectively. The weighted averageweighted-average annual interest rate on the outstanding balance under the Credit Facility was 5.1%5.4% and 5.8% at MarchJune 31,30, 2026 and December 31, 2025, respectively. As of MarchJune 31,30, 2026, there were $2.6$3.2 million letters of credit outstanding under the Credit Facility and the applicable margin on borrowings outstanding was 1.4%.1.7%.

As of MarchJune 31,30, 2026, we were in compliance with all covenants under our Amended and Restated Credit Agreement. Additionally, all undrawn capacity on our Credit Facility was available for borrowings as of MarchJune 31,30, 2026.

On January 21, 2026, we completed a private offering of $800.0 million aggregate principal amount of 6.0% senior notes due 2034 and received net proceeds of $789.4 million after deducting issuance costs. In January 2026, the approximately $10.6 million of issuance costs were recorded as deferred financing costs within long-term debt in our condensed consolidated balance sheets and are being amortized to interest expense in our condensed consolidated statementstatements of operations over the term of the notes. The net proceeds were used to repay borrowings outstanding under our Credit Facility.

The decrease in net cash used in investing activities was primarily due to $296.6 million of cash consideration paid in the NGCS Acquisition during the six months ended June 30, 2025, as well as a $54.7$68.2 million decrease in capital expenditures, as well as an $18.4 million increase in proceeds from the sale of property, plant and equipment.expenditures.

The change to net cash used in financing activities from net cash provided by financing activities was primarily due to net repayments on our Credit Facility of $821.7$52.9 million,million payment of debt issuance costs of $10.5 million,and a $5.7$10.7 million increase in dividends paid to stockholdersstockholders, andpartially offset by a $4.2$24.6 million increasedecrease in shares repurchased under the Share Repurchase Program. These increases were partially offset by $800.0 million of grossAdditionally, proceeds from the issuance of the 2034 Notes.Notes in January 2026 were offset by the 2028 Notes Redemption in April 2026.