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

•the ability of OPEC, Russia, national oil companies and other large producers to set and maintain production levels and prices for crude oil;

The rental contracts of many of our operating compressor units have a short-term duration, and oil and gas companies tend to respond quickly to upward or downward changes in prices. Any prolonged reduction in drilling and production activities has historically eroded both rental pricing and utilization rates for our compression equipment and services and adversely affected our financial results. As a result of any such prolonged reductions, we may suffer losses, be unable to make necessary capital expenditures or be unable to meet our financial obligations.

The U.S. economy has experienced elevated levels of inflation since early 2022. While such levels of inflation have moderated somewhat, inflation pressure continues and uncertainty remains regarding expectations of inflation duringinto 2025.the future. Should inflationary pressures continue or increase, the result will be an increase in our cost structure, including labor costs, parts costs, lubricants and other items used in our operations. If such cost increases occur, we may be unable to pass along such increases to our customers in the form of higher rental rates for our compressor units. Increases in inflation could also increase the costs of new compressor units, making them less attractive and decreasing the demand from our customers for such assets. 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. Should any of these items occur, they could negatively impact our results of operations, financial condition and cash flows.

Our fabricationassembly and maintenance operations are significantly affected by stringent and complex federal, state and local laws and regulations governing the discharge of substances into the environment or otherwise relating to environmental protection. In these operations, we generate and manage hazardous wastes such as solvents, thinner, waste paint, waste oil, wash down wastes, and sandblast material. We attempt to use generally accepted operating and disposal practices and, with respect to acquisitions, will attempt to identify and assess whether there is any environmental risk before completing an acquisition. Based on the nature of the industry, however, hydrocarbons or other wastes may have been disposed of or released on or under properties owned or leased by us or on or under other locations where such wastes have been taken for disposal. The waste on these properties may be subject to federal or state environmental laws that could require us to remove the waste or remediate sites where they have been released. We could be exposed to liability for cleanup costs, natural resource and other damages as a result of our conduct or the conduct of, or conditions caused by, prior owners, lessees or other third parties. Environmental laws and regulations have changed in the past, and they are likely to change in the future. If current existing regulatory requirements or enforcement policies change, we may be required to make significant unanticipated capital and operating expenditures.

International, nationalFederal and state governments and agencies continue to evaluate and promulgate legislation and regulations that are focused on restricting GHG emissions. Compliance with climate action regulations applicable to our customers’ operations may have significant implications that could adversely affect our business and operating results in the fossil fuel sectors, and boosting demand for technologies contributing to the climate action agenda.

In recent years, we have transitioned from in-house assembly of compressors, and we now purchase the majority of our compressors from third-party assemblers and suppliers. 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 operations, financial condition and cash flows. Our reliance on these suppliers involves several risks, including price increases (as a result of inflation or otherwise), quality issues and a potential inability to obtain an adequate supply of such equipment, materials and services in a timely manner. Additionally, we may experience long lead times from our suppliers of compression equipment, which may negatively impact our ability to deliver compressors to our customers in a timely manner. If we are unable to meet the demands of our customers, our existing customers may terminate their contractual relationships with us or curtail future orders, or we may not be able to compete for business from new customers, which, in either case, could have a material adverse effect on our business, results of operationsoperations, financial condition and financialcash condition.flows. Further, supply chain issues could adversely affect our ability to obtain necessary materials, parts or lubricants 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, or other factors, could have a negative impact on our business, results of operations, financial condition and cash flows.

A significant amount of our revenues and accounts receivable are related to onetwo customercustomers and a loss of thisthese customercustomers or other current customers could adversely affect our results of operations.

Our business is dependent not only on securing new customers but also on maintaining current customers. We had onetwo customercustomers that accounted for an aggregate of approximately 5459 percent of our revenue for each of the yearyears ended December 31, 2024,2025 and the2024. As of December 31, 2025, these same customercustomers accounted for an aggregate of approximately 50 percent of our revenue for the year ended December 31, 2023. As of December 31, 2024, this same customer accounted for an aggregate of 5262 percent of our accounts receivable. Unless we are able to retain our existing customers, or secure new customers if we lose one or more of our significant customers, our revenue and results of operations would be adversely affected. In addition, the default on payments by our significant customer or other important customers would negatively impact our cash flows and current assets.

In keeping with our streamlined approach to our business, our executive management team consists of threetwo executive officers: our (i) Chief Executive Officer, (ii) President and Chief Operating Officer and (iiiii) Chief Financial Officer. In addition, we employ athree numbervice ofpresidents key employees in connection withon our business,management includingteam into connection with the designlead and engineeringdirect of(i) ouroperations, compressors.(ii) technical services and (iii) safety and maintenance, respectively. While we do have employment agreements with our threetwo executive officers, the loss of any of our executive officers or other key employees could have an adverse impact on our business. We do not carry any key-person insurance on any of our officers or directors.

We have a five-year senior secured revolving credit agreement, as amended (the “Credit Facility”),Facility, with a total commitment of $300.0$400.0 million. We also have a right to request from the lender, an increase to the potential aggregate commitment of up to $50.0$100.0 million; provided, however, the aggregate commitment amount is not permitted to exceed $350.0$500.0 million. As of December 31, 2024,2025, our borrowing base under the Credit Facility was approximately $300.0$400.0 million, with $170$230.0 million outstanding,of borrowings outstanding leaving approximately $130.0$170.0 million available for future borrowing.

During 2025,2026, the amount we will spend on capital expenditures related to compression equipment will be determined primarily by the activity of our customers, our financial resources and access to capital. The amount and timing of any capital expenditures may vary depending on a variety of factors, including the level of activity in the oil and gas exploration and production industry and the presence of alternative uses for our capital, including any acquisitions that we may pursue. In addition, although a significant portion of the value of a new compressor increases our borrowing base under our Credit Facility once it has been fully constructed and put into service, we generally have an approximate lag of 9nine to 12 months between borrowing money under the Credit Facility to fund progress payments to build a compressor unit and the time it becomes eligible for inclusion in our borrowing base. This lag can reduce the amount of future borrowings available for working capital purposes and new compressor unit acquisition until the unit is placed into service.

During 2024,2025, we increased the borrowing commitment of the Credit Facility from $225$300 million to $300$400 million and we have the right to request an increase in the potential commitment by $50$100 million (subject to borrowing base limitation and customary covenants). As of December 31, 2024,2025, we had $170$230 million of borrowings outstanding under the Credit Facility and anticipate additional borrowing under the Credit Facility throughduring 2025.2026. Should we utilize our full debt capacity, growth beyond that point could be impacted. As a result of our indebtedness at any given point in time, we might not have the ability to incur any substantial additional indebtedness. The level of our indebtedness could have several important effects on our future operations, including:

Our current Credit Facility agreement contains covenants that limit our operating and financial flexibility and, if breached, could expose us to severe remedial provisions.

Under the terms of our current Credit Facility agreement,Facility, we must:

Our current Credit Facility agreement contains a variable interest rate and increases to such rate may increase our borrowing cost.

The interest expense charged on our outstanding borrowings under the Credit Facility agreement is based upon a variable rate which fluctuates as interest rates change. Changes in macroeconomic conditions outside of our control could result in a higher interest rate being charged on our outstanding borrowings and an increase in the overall interest costs charged. This could have an adverse impact on our operations, our free cash flow and our ability to invest in future growth.

As part of our business strategy, we evaluate potential acquisitions of other businesses orand assets. However, there can be no assurance that we will be successful in consummating any such acquisitions. The successful acquisition of businesses or assets will depend on various factors, including, but not limited to, our ability to obtain financing and the competitive environment for acquisitions. In addition, we may not be able to successfully integrate any businesses or assets that we acquire in the future. The integration of acquired businesses is likely to be complex and time-consuming, place a significant strain on management and may disrupt our business. We also may be adversely impacted by any unknown liabilities of acquired businesses, including environmental liabilities. We may encounter substantial difficulties, costs and delays involved in integrating common accounting, information and communication systems, operating procedures, internal controls and human resources practices, including incompatibility of business cultures and the loss of key employees and customers. These difficulties may reduce our ability to gain customers or retain existing customers, and may increase operating expenses, resulting in reduced revenues and income and a failure to realize the anticipated benefits of acquisitions.

In 2024,2025, we had significant growth in our revenue and operations. Our strategy envisions the continued expansion and growth of our business, subject to the demand for oil and gas and the impact of the other risks set forth in this risk factor section and elsewhere in this Report.Annual Report on Form 10-K. Continued rapid growth will likely challenge and place a strain on our management systems and resources if we are unable to timely adapt and expand such systems and resources. Many of our ongoing reporting functions rely on data capture and recording using manual entry of transaction data. In order to efficiently and effectively manage our planned growth, we will need to continue to analyze and upgrade our use of information technology (“IT”), including our enterprise resource planning and other operating systems and this will likely require future capital investment. We must continue to refine and expand our business capabilities, our workforce, our systems and processes, and our access to financing sources. As we continue to grow, we must continue to hire, train, supervise and manage new employees. We cannot assure that we will be able to:

Our rental and sales contractsagreements provide for varying forms of indemnification from our customers and in most cases may require us to indemnify our customers. Under some of our rental and sales contracts,agreements, liability with respect to personnel and property is customarily assigned on a “knock-for-knock” basis, which means that we and our customers assume liability for our respective personnel and property. However, in certain rental and sales contractsagreements we assume liability for damage to our customer’s property as well as the property of certain other third parties on the site resulting from our negligence. Since our products are used in production applications in the energy industry, expenses and liabilities in connection with accidents involving our products and services could be extensive and may exceed our insurance coverage.

The trading price of our common stock and the price at which we may sell securities in the future are subject to substantial fluctuations in response to various factors, including our ability to successfully accomplish our business strategy, changes in our dividend policy or share repurchase program, the trading volume of our stock, changes in governmental regulations, actual or anticipated variations in our quarterly or annual financial results, our involvement in litigation, general market conditions, the prices of oil and gas, announcements by us and our competitors, our liquidity, our ability to raise additional funds, and other events such as those discussed in the factors above.

Substantial sales of our common stock in the public market, or the perception by the market that those sales could occur, may lower our stock price or make it difficult for us to raise additional equity capital in the future. According to filings made with the SEC through March 14,13, 2025,2026, an aggregate of approximately 3523 percent of the outstanding shares of our common stock are owned by fivefour institutional investors, each of which owns more than 5five percent of our outstanding shares as of the date of their respective filings. Potential sales of large amounts of these shares in a short period of time by one or more of these significant investors could have a negative impact on our stock price. In addition, potential sales of our common stock by our directors and officers, who beneficially own approximately 6three percent of the outstanding shares of our common stock as of March 14,13, 2025,2026, and because of the negative perception of sales by insiders, could also have a negative impact on our stock price.

We rent, design, sell,install, service, operateservice and maintain natural gas and electric compressors and related equipment for oil and gas production and processing facilities, generally using equipment from third-party fabricators and OEM supplierssuppliers. alongSubstantially withall limitedof in-houseour assembly.compressor Aassembly is done by third-party contractors while a limited level of assembly work is doneremains in-house andat anour increasingTulsa, amountOklahoma is done by third-party contractors. We also provide an exchange and rebuild program for compressors and maintain an inventory of new and used compressors to facilitate this business.facility. Our primary focus is on the rental of natural gas engine and electric motor drive compressors. Our rental contractsagreements generally provide for initial terms of six12 to 60 months, with our largerlarge horsepower units having longer initial terms than our small and medium horsepower units. After the initial term of our rental contracts,agreements, most of our customers have continued to rent our compressors on a month-to-month basis. Rental amounts are billed monthly in advance and include maintenance of the rented compressor units.

We conduct our operations in several oil and gas producing basins throughout the United StatesU.S. including the Permian, Barnett Shale, Anadarko, San Juan, Utica/Marcellus Shale, Eagle Ford Shale and Antrim Shale. We have operating facilities in five states including Texas, Oklahoma, New Mexico, Michigan and Ohio. A total of 7578 percent of our rental revenue is generated from the Permian Basin and approximately 7590 percent of our rental revenue supports oil production primarily in the form of gas lift operations. We operate in one reporting segment.

Our strategy for growth is focused on our compressor rental business. Gross margins, exclusive of depreciation and amortization, for our rental business have historically been in the mid-40mid-50 percent to low-60 percent range, while margins for the compressor sales businessand aftermarket services businesses tend to be substantially lower.

The oil and gas equipment rental and services industry is cyclical in nature. The most critical factor in assessing the outlook for the industry is the worldwide supply and demand for oil and gas and the corresponding changes in commodity prices. As demand and prices increase, oil and gas producers typically increase their capital expenditures for drilling, development and production activities, although recent equity capital constraints and demands from institutional investors to keep spending within operating cash flow have meaningfully restrained capital expenditure budgets of domestic exploration and productionE&P companies. Generally, increased capital expenditures result in greater revenues and profits for service and equipment companies.

Generally, sustained higher commodity prices lead to higher capital expenditures by oil and gas producers and higher levels of production. In general, we expect our overall business activity and revenues to track the level of activity in the oil and gas industry, specifically production levels, with changes in crude oil and condensate production and consumption levels and prices affecting our business more than changes in domestic natural gas production and consumption levels and prices. In recent years we have increased our rental and salesrentals in unconventional oil shale plays, which are more dependent on crude oil prices. With this shift towards oil production the demand for overall compression services and products is driven by two general factors; (i) an increased focus by producers on artificial lift applications, e.g., production enhancement with compression assisted gas lift; and (ii) declining reservoir pressure in maturing natural gas producing fields, especially non-conventional production. These latter types of applications have historically been serviced by wellhead size compressors, and continue to be, but there has also been an economic move by our customers towards centralized drilling and production facilities, which have increased the market need for single and multiple larger horsepower compressor packages. We recognized this need in recent years and have shifted our capital program towards acquiring compressor packages that range from 400 horsepower up to 2,500 horsepower for rental to our customers. While this is a response to market conditions and trends, it also provides us with the opportunity to compete as a full-line compression service provider.

Of the total horsepower utilized as of December 31, 2024,2025, 376,685464,137 of horsepower was being rented under contracts expiring between 20252026 and 20292030 and 115,07198,539 of that horsepower was being rented on a month-to-month basis. Of the 1,2081,245 compressors utilized as of December 31, 2024,2025, 573754 were being rented under multi-year contracts and 491 were being rented on a month-to-month basis.

Crude Oil. The level of production for crude oil activity and capital expenditures has generally been dependent upon the prevailing view of future crude oil prices, which are influenced by numerous supply and demand factors, including availability and cost of capital, well productivity and development costs, global and domestic economic conditions, environmental regulations, policies of OPEC and Russia, and other factors. We feel that the current crude oil market production outlook is favorable, with current prices creating strong incentives for our customers to maximize their production levels. While crude oil prices have historically been volatile, we expect demand for our existing compressor fleet to remain positive assuming crude oil prices remain within reasonable bands with respect to current pricing levels.

Natural Gas. We believe the market outlook for natural gas production in the U.S. remains steady while short term price volatility remains a factor due to geopolitical influences and shifts in LNG exports. We believe opportunities for increased utilization of our small and medium horsepower units are supported by continued investment in shale gas development, particularly in the Permian basin and the Utica and Marcellus Shale.Shales.

“Adjusted EBITDA” is a non-GAAP financial measure that we define as net income (loss) before interest, taxes, depreciation and amortization, as well as an increase in inventory allowance, impairments, retirement of rental equipment, non-recurring restructuring charges including severance and non-cash equity-classified stock-based compensation expenses. This term, as used and defined by us, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. Adjusted EBITDA should not be considered in isolation or as a substitute for operating income, net income or loss,income, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. However, management believes Adjusted EBITDA is useful to an investor in evaluating our operating performance because:

Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported underin accordance with GAAP. Some of these limitations are:

There are other material limitations to using Adjusted EBITDA as a measure of performance, including the inability to analyze the impact of certain recurring items that materially affect our net income or loss, and the lack of comparability of results of operations of different companies. Please read the table below to see how Adjusted EBITDA reconciles to our net income (loss),income, the most directly comparable GAAP financial measure.

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

RentalsRental

We generate revenue from rentingrenting, maintaining and servicing compressors to our customers.customers Theseunder contracts,contractual arrangements. The underlying rental service agreements, which all qualify as operating leases under GAAP, may alsogenerally include a fee for servicing the compressor unit as well as surcharges for fluids during the rental contract.term. Our rental contractsagreement terms typically range from six12 to 60 months. Our revenue is recognized over time, with monthly payments over the term of the contract.agreement. After the terms of the contractagreement have expired, a customer may renew its contractagreement or continue renting on a monthly basis thereafter. The primary costs associated with providing our compressor fleet to our customers includes routine maintenance and repairs, fluids, primarily motor oils, and labor and related support costs for our field service facilities and service employees that are geographically dispersed throughout our operating regions.

Rental revenue increased for the year ended December 31, 2024,2025, as compared to 20232024 due primarily to an increase in rented horsepower despite a nominal decrease in the number ofand units rented and a decrease in total customers.utilized. The increase in revenue reflects a continuing trend of growing demand for our higherlarge horsepower units (400 horsepower and greater) which provide for higher rental rates and realized adjusted gross margins. The increase inOur utilized horsepower increased during 2025 as compared to 2024 which reflects the continued addition of highlarge horsepower compressor units to our fleet during 2024 consistent with our emphasis on larger units over the past twoseveral years.years, as well as the retirement of certain medium and small horsepower units from the fleet partially offset by the return of small horsepower units to the idle fleet by certain customers at the end of their lease terms. During the year ended December 31, 2024,2025, we placed into service a total of 220434 newly set units, including 198364 from our existing fleet and 2270 new units. Of those unit sets, a total of 111126 were highlarge horsepower units and 2270 of those were new units to the fleet. The decline in customers is primarily attributable to E&P industry consolidation as well as the acquisition of existing producing oil and gas properties among E&P companies; however, it has not resulted in any meaningful decrease in our level of business activity. The cost of rentals increased on an absolute basis due to the effects of supporting a larger quantity of utilized horsepower and inflationary pressures primarily in labor and parts costs. As a result of these factors, our adjusted gross margin increased on both an absolute basis as well as a percentage of revenues for the year ended December 31, 2024, compared to the year ended December 31, 2023.

We generate revenue byprimarily from the sale of custom/assembledcompressor compressors and parts, as well as exchange/rebuilding customer owned compressors and sale of used rental equipment.parts. Costs of sales include purchases of engines, compressors, coolers and other component materials as well as direct and indirect labor attributable to the assembly of equipment to meet the unique specifications of our customers.materials. In addition, our costs of sales include overhead and related support costs attributable to our assembly, repairstorage and overhaulassembly, facilities inincluding Midland, Texas andthrough Tulsa,its Oklahoma.closure at the end of March 2025.

Sales revenue declined for the year ended December 31, 2024,2025, as compared to 2023.2024 Salesdue are subjectprimarily to fluctuations in the timingphasing out of industry activity related to our customers’ capital projects and, as such, can vary substantially between periods. Due to these circumstances as well as the costs of maintaining support facilities relative to revenues, we continue to shift our business away fromdirect sales of newcompressors compressorand packagesrebuild towork rentingwhich ourwas ownedthe unitsprimary tofocus ourof customers.the former Midland Facility. While the costs to support our sales revenues declined on an absolute basis, primarily reflecting a lower volume of business, the adjusted gross margin declinedimproved to a negative valuemarginally due primarily to the absence of indirect labor and fixed overhead costs that are not otherwise subject to capitalization subsequent to the closure of the former facility in Midland, Texas which we closed at the end of March 2025. Sales represented an insignificant portion of our assembly,overall repairgross margins in 2025 and overhaul facilities.2024.

Third party aftermarketAftermarket services revenues, costsrevenues and margincosts declined for the year ended December 31, 2024,2025, compared to 2023.2024; however, the absolute gross margin and percentage both improved as compared to 2024. The decline in revenues and costs is primarily attributable to a lower volume of serviceunit call-outcommissioning work performed during 20242025 compared to 2023.2024 as well as the effects of lower freight costs. Aftermarket services only represented 3.1an percentinsignificant portion of our revenueoverall gross margins in 2024,2025 providingand minimal impact on our overall adjusted gross margin.2024.

Our selling, general and administrative (“SG&A”) expenses include compensation and benefits, including stock-based compensation, commissions and other support costs of departments serving administrative and corporate governance functions, such as executive management, finance and accounting, sales and marketing, procurement, logistics and supply chain, human resources, information technology,technology (“IT”), health, safety and environmental and investor relations. In addition, SG&A includes non-personnel costs, such as occupancyrent costs,and occupancy, IT support costs,support, professional fees and other supporting corporate expenses including public company compliance costs. When applicable, SG&A expenses also includes severance benefits and related costs associated with exit activities and restructuring actions.

Depreciation and amortization expense increased on an absolute basis and declined as a percent of revenues during the year ended December 31, 2024,2025, compared to 2023.2024, The increase isdue primarily to depreciation expense associated with the result of new units added to our rental fleet in 2024 and 2023. We placed into service 22 highlarge horsepower units (approximately 28,740 horsepower) to our fleetplaced in 2024service andduring 92the unitssecond (approximatelyhalf 98,349 horsepower) in 2023. All 22 inof 2024 andcontinuing 73through the end of those units in 2023, were 400 horsepower or larger, representing a substantial portion of the total horsepower added during each year, respectively.2025. These higherlarge horsepower unit additions, which began in earnest during 2023, are reflective of our strategic plans to concentrate our business development on these higher margin applications.

During 2025, we recorded an increase of $1.1 million to the allowance for obsolescence primarily attributable to limitations on our ability to market certain assembled parts as well as the transfer of inventory that remains useful from our former Midland, Texas facility, in connection with its closing in March 2025, to our other operating facilities. Due primarily to the slow-moving nature, obsolescence of a portion of our long-term inventory and inventory related to the retirement of certain rental equipment, we recorded an increase of $1.9 million to the inventory allowance reserve for the year ended December 31, 2024. During 2023, we recorded an increase of $4.0 million to the inventory allowance reserve under similar circumstances as well as our decision to cease further assembly activities at our facility in Midland, Texas. We ended 20242025 with an inventory allowance balance of $5.9$3.6 million. Please see Note 4 (“Inventory”) to our Consolidated Financial Statements for additional information regarding the inventory allowance.

The following table presents the gains recognized upon the saledisposition of property and equipmentassets for the periods presented:

Gains recognized during the years ended December 31, 20242025 and 20232024 are primarily attributable to the sales of trucks after the completion of their useful lives. In addition, amounts are included during both years for sales scrap materials.

Interest expense primarily reflects the costs of borrowing, including commitment fees and the amortization of debt issue costs, under our Credit Facility, net of amounts capitalized attributable to certain capital projects. Also included is interest expense on our financing leases.leases during 2024 as all were settled before 2025.

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

OtherInterest Income (Expense)

This captioncomponent of our income primarily reflects non-operating items of income and loss including non-cash gains and losses attributable to our corporate-owned life insurance (“COLI”) policies related to our deferred compensation plan.plan as well as other credits, charges and scrap asset sales. Please see Note 12 (“Deferred Compensation Plan”) to our Consolidated Financial Statements for additional information regarding the deferred compensation plan.

Provision for Income Tax ExpenseTaxes

IncomeProvision taxfor expenseincome taxes represents our income tax provisiontaxes as determined in accordance with GAAP. It considers taxes attributable to our obligations for federal taxes under the IRC as well as to various states in which we operate, primarily Texas. Please see Note 11 (“Income Taxes”) to our Consolidated Financial Statements for additional information.

Income tax expense increased for the year ended December 31, 2024,2025, compared to 20232024 due primarily to substantially higher pre-tax income during 20242025 despiteand the impact of a lowerhigher effective tax rate.rate attributable to state and local income taxes. Our effective tax rate for both years differs from the U.S. federal statutory rate of 21%. The effective tax rate declined during 2024 from that during 2023 largely due to certain executive severance compensation expenses incurred during 2023 that were non-deductible for income tax purposes. Only a minimal portion of our total income tax expense is current while $4.2 million and $1.8 million is considered deferred for 2024 and 2023, respectively.

Our primary sources of liquidity include cash on hand, cash provided by operating activities and borrowings under our Credit Facility. TheOn CreditApril Facility18, 2025, we entered into the Fourth Amendment which provides us with up to $300$400.0 million in borrowing commitments with an additional $50$100.0 million at our request.request through an accordion feature. The accordion feature is subject to certain conditions, including the absence of a default, the consent of new or existing lenders willing to provide additional commitments, and our pro forma compliance with the Credit Facility’s financial covenants. As of December 31, 2025, the borrowing base under the Credit Facility was $300.0$400.0 million with $168.0$230.0 million of borrowings outstanding as of March 14, 2025, leaving $132.0$170.0 million of availability under the Credit Facility.

Our cash flows from operating and investing activities are subject to a degree of volatility due primarily to (i) the consistency of our customers in remitting amounts owed to us for our services in full and on a timely basis and (ii) the timing of payments to our vendors and suppliers for capital projects which are often made well in advance of placing new compressor equipment into service. In order to mitigate such volatility we employ disciplined efforts to monitor customer credit and maintain communications to support collection efforts when necessary. Furthermore, and in certain circumstances, we require deposits in advance of transactions that require substantial investment on our part. To the extent necessary, we rely on the availability of our Credit Facility to fund capital expenditures beyond that provided by our cash flows from operating activities.

The level of our capital expenditures will vary in future periods depending on energy market conditions and other related economic factors. Based upon existing economic and market conditions, we believe that cash on hand, cash flows from operating activities and borrowings under the Credit Facility will be sufficient to satisfy our capitalcapital, dividend and liquidity requirements for at least the twelve months subsequent to the date that this Annual Report on Form 10-K was filed. We also believe we have flexibility with respect to our financing alternatives and can make adjustments to our capital expenditure plans if circumstances warrant. We do not have any material continuing commitments related to our current operations that cannot be met with our cash on hand, cash from operating activities and borrowings under our Credit Facility.

Cash From Operating Activities. As of December 31, 2024, we had $2.1 million ofOur cash onprovided hand.by operating activities was $62.9 million. For additional information and an analysis of or historical cash flows from operating activities, see the “Cash Flows” discussion that follows.

Credit Facility Borrowings. During 2024,2025, we borrowed $6.0$60.0 million, net of repayments, under the Credit Facility. Through March 14, 2025, we repaid $2.0 million, net of borrowings under the Credit Facility. The following table summarizes our borrowing activity under the Credit facility for the periods presented:

Cash Flows from Operating Activities. Our cash flows from operating activities increaseddecreased by $48.4$3.5 million during 20242025 from 2023.2024. From a broad perspective, cash flows improveddeclined in 2025 due primarily to substantial growth in our high horsepower unit rentals which also provide for higher realized margins. In addition, we madethe substantial progress made in the 2024 period for improving our processes for billings and collections from certain customers andthat had the effect of lowering our “days sales outstanding (“DSO”) statistics for accounts receivable.receivable Theseaccounts. While these efforts arosehave fromcontinued with favorable DSO performance throughout 2025, the negativetiming impacteffect onwas more beneficial during 2024 while 2025 reflects a more normalized cash operating cycle. In addition, we increased our maintenance parts inventory during 2025 in support of our growing fleet and incurred substantially higher costs in 2025 attributable to certain IT system conversion projects. These working capital duringuses 2023were aspartially offset by growth in accounts payable and the favorable effects of higher realized margins attributable to growth in our rentalhigh activitieshorsepower beganunit to grow significantly. We anticipate a continued focus on these efforts into 2025 as we concentrate on further improvements to our working capital performance statistics.rentals.

Cash Flows from Investing Activities. For the years ended December 31, 20242025 and 2023,2024, we invested approximately $71.9$121.5 million and $153.9$71.9 million, respectively, in rental equipment, property and other equipment. Included in these totals for 20242025 and 20232024 were $66.9$109.8 million and $152.5$60.5 million infor newgrowth equipmentcapital expenditures to expand our rental fleet and $5.0$11.7 million and $1.4$11.4 million infor othercapital propertymaintenance and equipment,projects, respectively. Our investment in rental equipment includes any changes to work-in-progress related to our rental fleet projects at the beginning of the year compared to the end of the year. Our rental work-in-progress increased by $0.8 million and $13.8 million during 2024 and 2023, respectively. We paid $0.2 million and $0.4 million for COLI policy purchases during 2024 and 2023. We also received proceeds from the sale of property and equipment of $0.5$0.1 million and $0.5 million in 2025 and 2024, respectively, as well as insurance proceeds from damage to certain rental equipment of $0.1 million during the same periods, respectively.2025.

Cash Flows from Financing Activities. During 2024,2025, we had net borrowings of $6.0$60.0 million under the Credit Facility while 20232024 included net borrowings of $139.0$6.0 million. The decreaseincrease in net borrowings is due primarily to the substantial investment in large horsepower units during the prior year consistent with our expanding fleet and strategy of directing our business to these larger, higher margin applications. While we incurred and paid debt issuance costs during both years, the amounts paid during 20232024 were $1.7$0.3 million higher in connection with the Fourth Amendment during 2025 as compared to the costs for amendments to the Credit Facility in 2024. During 2025 we also paid $2.6 million for our common stock dividend which was substantiallyinitiated upsized withfor the amendmentthird quarter of 2025 and restatementcontinued in Februarythe 2023.fourth quarter. We also received proceeds from the exercise of stock options of $0.2 million and $0.3 million during 2024 while none were received during 20232025 and taxes paid related to the net share settlements of equity awards were $0.2 million and $1.0 million for 2024 and 2023,2024, respectively.

Credit Facility. We have a five-year senior secured revolving credit agreement, as amended, or the Credit Facility, with Texas Capital Bank, National Association as administrative agent (the “LenderAdministrative Agent”), as administrative agent,and TCBI Securities, Inc., as joint lead arranger and sole book runner and Bank of America, N.A., and the Huntington National Bank as joint lead arranger,arrangers and joint book runners, and the lenders party thereto (the “Lenders”), with a total commitment of $300.0$400.0 million. We also have a right to request from the Lender,Lenders, an increase to the potential aggregate commitment of up to $50.0$100.0 million; provided, however, the aggregate commitment amount is not permitted to exceed $350.0$500.0 million. 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. The maturity date of the Credit Facility is February 28, 2028.

We assess our long-lived assets, including rental equipment, other property and equipment and intangible assets for impairment whenever events or changes in circumstances indicate that the net carrying values may not be recoverable. The following factors could trigger an impairment review: significant underperformance relative to historical or projected future cash flows; significant adverse changes in the extent or manner in which an asset (or asset group) is being used or its condition, including a meaningful decline in fleet utilization over prior periods; 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 organizations, as well as significant declines in oil and natural gas prices; legislative changes prohibiting us from leasing our units; or poor general economic conditions. After the assessments of such circumstances, an impairment loss is recognized if the future undiscounted net cash flows associated with the asset (or asset group) and the estimated fair value of the asset are less than the asset’s (or asset group’s) carrying value. During the year ended December 31, 2024,2025, we fullyrecognized impairedan impairment of $2.6 million in connection with our indefinite-lived intangible asset attributableefforts to aplan tradefor namean (seeeventual sale of the discussionFormer inHeadquarters Property. Please see Note 7 (“ResultsProperty ofand OperationsEquipment” above) and Note 8.19 (“IntangibleSubsequent AssetsEvents”) to our Consolidated Financial Statements). for additional information..

PleaseExcept referfor the risk factors set forth below, there have been no material changes to andthe readrisk factors disclosed in Item 1A, Risk Factors1A in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 for a discussion of the risks associated with our Company and the industry in which we operate.2025. We may experience additional risks and uncertainties not currently known to us. Further, as a result of developments occurring in the future, conditions that we currently deem to be immaterial may also materially and adversely affect us. Any such risks may materially and adversely affect our business, financial condition, cash flows, and results of operationsoperations.

The discussion and analysis of ourthe financial condition and results of operations of Natural Gas Services Group, Inc. (the “CompanyCompany,”, “NGSNGS,”, “Natural Gas Services GroupGroup,”, “we,” “us” or “our”) for the periods ended MarchJune 31,30, 2026, and 2025 are based on, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the related notes included elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2025. The following discussion contains forward-looking statements that include risks and uncertainties. For a description of limitations inherent in forward-looking statements, see “Special Note Regarding Forward-Looking Statements” above.

All dollar amounts presented in the tables that follow are in thousands unless otherwise indicated. References to “quarters” represent the three months ended MarchJune 31,30, 2026, or 2025, as applicable. Certain variances that represent results that are not meaningful are indicated as “NM.”

We rent, design, install, service and maintain natural gas and electric compressors and related equipment and parts for our customers’ oil and gas production and processing facilities, generally using equipment from third-party fabricators and OEM suppliers. Substantially all of our compressor assembly is done by third-party contractors while a limited level of assembly work remains in-house at our Tulsa, Oklahoma facility. Our primary focus is on the rental of natural gas engine and electric motor drive compressors. Our rental contracts generally provide for initial terms of 12 to 60 months, with our larger horsepower units having longer initial terms than our small and medium horsepower units. After the initial term of our rental contracts, most of our customers have continued to rent our compressors on a month-to-month basis. Rental amounts are billed monthly in advance and include maintenance of the rented compressor units.

We conduct our operations in several oil and gas producing basins throughout the United States including the Permian, Barnett Shale, Anadarko, San Juan, Utica/Marcellus Shale, Eagle Ford Shale and Antrim Shale. We have operating facilities in five states including Texas, Oklahoma, New Mexico, Michigan and Ohio. AApproximately total of 7980 percent of our rental revenue is generated from the Permian Basin and approximatelya 91substantial percentportion of our rental revenue supports oil production primarily in the form of gas lift and midstream operations. We operate in one reporting segment.

Of the total horsepower utilized as of MarchJune 31,30, 2026, 465,638521,931 of horsepower was being rented under contracts expiring between 2026 and 2031 and 109,331147,988 of horsepower was being rented on a month-to-month basis. Of the 1,2431,521 compressors utilized as of MarchJune 31,30, 2026, 754921 units were being rented under multi-year contracts and 489600 units were being rented on a month-to-month basis.

Crude Oil. The level of production for crude oil activity and capital expenditures has generally been dependent upon the prevailing view of future crude oil prices, which is influenced by numerous supply and demand factors, including availability and cost of capital, well productivity and development costs, global and domestic economic conditions, environmental regulations, policies of OPEC, the United Arab Emirates and Russia, recent hostilities involving the United States, Israel, the Gulf States, and Iran, and other factors. Regardless of current oil price volatility driven by geopolitical factors, we expect demand for compression overall, and specifically our fleet to remain strong.

We utilize certain financial and operating metrics to analyze our performance and assess our operating results and overall profitablyprofitability and liquidity. The most significant of these measures are “Adjusted Gross Margin” and “Adjusted EBITDA” both of which are measurements that are not explicitly defined in accordance with generally accepted accounting principles in the United States of America (“GAAP”), or non-GAAP financial measures, and may vary among different industries and the participants therein.

“Adjusted EBITDA” is a non-GAAP financial measure that we define as net income (loss) before interest, taxes, depreciation and amortization, as well as an increase in inventory allowance, impairments, retirement of rental equipment, non-recurring restructuring charges including severanceseverance, strategic transaction costs including incremental costs directly attributable to business combinations and similar transactions and non-cash equity-classified stock-based compensation expenses. This term, as used and defined by us, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. Adjusted EBITDA should not be considered in isolation or as a substitute for operating income, net income, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. However, management believes Adjusted EBITDA is useful to an investor in evaluating our operating performance because:

Three and six months ended MarchJune 31,30, 2026, compared to the three and six months ended MarchJune 31,30, 2025.

Rental revenue increased for the three and six months ended MarchJune 31,30, 2026, as compared to the corresponding periodperiods in 2025 due primarily to an increase in rented horsepower and units. The increase in revenue reflects a continuing trend of growing demand for our large horsepower units (400380 horsepower and greater) which provide for higher rental rates and realized adjusted gross margins. In addition, the Flatrock Acquisition provided rental revenues of $1.9 million during the period from the Acquisition Date through June 30, 2026. Our consolidated utilized horsepower increased during the firstthree quarterand ofsix 2026months ended June 30, 2026, as compared to the prior year periodperiods which reflects the continued addition of large horsepower units to our fleet consistent with our emphasis on larger units over the past several years, as well as the retirement of certain older medium and small horsepower units from the fleet. ThroughIn Marchaddition, 31,we added 87,233 of rented horsepower from 270 rented units in June 2026 attributable to the Flatrock Acquisition. In the six months ended June 30, 2026, we placed into service a total of 98180 newly set units, including 64137 from our existing fleet and 3443 new units. Of those unit sets, a total of 3761 were large horsepower units and 3443 of those were new units to the fleet.

The cost of rentals increased onfor anthe absolutethree basis,and six months ended June 30, 2026, consistent with revenues, due to the effects of supporting a larger quantity of utilized horsepower and inflationary pressures primarily in labor and parts costs. Furthermore, we experienced higher unit-redeployment costs consistent with a larger volume of unit sets as compared to the prior year periods. We also experienced higher lubricant costs during the 2026 periods due primarily to the larger quantity of utilized horsepower. An expanding portion of our rented compressor units utilize our proprietary System Management and Recovery Technology (“SMART”) and telemetry software which reduces unplanned shutdowns and increases productivity. Despite inflationary pressure associated with our primary cost components, the SMART and telemetry technology allows us to streamline and manage our maintenance activities more efficiently and thereby mitigate the costs to a manageable extent. As a percentage of revenue, cost of rentals, specifically labor,labor and replacement parts, andfor lubricantsthe 2026 periods declined compared to the firstcorresponding and fourth quartersperiods in 2025. We expect these costs will normalize over the coming quarters. As a result of these factors, our adjusted gross margin increased on both an absolute basis as well as a percentage of revenues for the three and six months ended MarchJune 31,30, 2026, when compared to the comparablecorresponding periodperiods in 2025.

We generate revenue primarily from the sale of compressor and other parts and to a lesser extent repair and overhaul services. Costs of sales primarily include purchases of component materials. In addition, our costs of sales include overhead and related support costs attributable to our storage, assembly facilities including Midland, Texas through its closure at the end of March 2025.

Sales revenue declinedincreased for the three months ended MarchJune 31,30, 2026 due primarily to off-cycle sales of flare parts compared to the quarterly period during 2025 and declined for the six months ended June 30, 2026, compared to the corresponding period in 2025 due primarily to the phasing out of direct sales of compressors and repair/overhaul work which was the primary focus of the former Midland Facility. The costs to support our sales revenues declined on an absolute basis,basis during both periods, primarily reflecting a substantially lower volume of business. SalesWhile marginally positive for the periods in 2026 due primarily to the off-cycle sale of flare parts, sales represented a negligible negative contribution to gross margin in the three and six months ended MarchJune 31,30, 2026, and 2025, respectively.

Third party aftermarket services revenues, costs and absolute gross margin increaseddecreased for the three months ended MarchJune 31,30, 2026 compared to the quarterly period during 2025 due primarily to lower activity while revenues and costs increased marginally for the six months ended June 30, 2026, compared to the corresponding period during 2025; however, the gross margin percentage declined over the prior six month period in 2025. The increase in revenue and costs during the six months ended June 30, 2026 is primarily attributable to a marginally higher volume of unit commissioning work performed during the 2026six-month period in 2026 compared to 2025. The margin decline is attributable to higher level of new unit set freight services passed on to customers during the 2025 period.periods. Aftermarket services represented an insignificant portion of our gross margin in the three and six months ended MarchJune 31,30, 2026, and 2025, respectively.

The following table summarizes the components of our SG&A expenses for the periods presentspresented:

SG&A expenses increased during the three and six months ended MarchJune 31,30, 2026, as compared to the corresponding periodperiods in 2025. In general, the increase in our total SG&A expenses reflects a higher level of cost to appropriately scale our administrative function.function commensurate with our overall organizational growth. Excluding non-cash share-based compensation and the strategic transaction costs associated with the Flatrock Acquisition, our primary SG&A expenses have declined as a percentage of our revenues in both of the 2026 periods as compared to the corresponding periods in 2025. The increase in primary SG&A expenses during the three and six months ended MarchJune 31,30, 2026 as compared to the 2025 periods was impacted by (i) higher professional fees and public company costs of $0.4 million and $0.8 million, respectively, including costs associated with our recent Redomestication, (ii) higher salaries and benefits, including short-term incentive compensation, of $0.2$0.1 million and $0.4 million, respectively, reflecting support staff growth and performance, (iii) higher occupancy and office costs of $0.1 million and $0.2 million, respectively, (iv) $0.2 million attributable to Flatrock’s legacy administrative operations from the Acquisition Date through June 30, 2026, and (v) higher IT support costs of $0.1 million and $0.2 million, respectively, in support of our growth initiatives and noncapitalizable costs associated with certain IT system conversionimplementation projects and (iv) higher occupancy and office costs of $0.1 million. Our equity classified stock-based compensation increased during the 2026 period over 2025 due primarily to a higher mix of performance-based share unit awards, or PSUs, for our executive officers in the 2026 period. PSUs generally have a higher grant-date fair value than traditional restricted stock and restricted stock units.projects.

Depreciation and amortization expense increased for the three and six months ended MarchJune 31,30, 2026, as compared to the corresponding periodperiods in 2025, due primarily to depreciation expense associated with the large horsepower units placed in service during 2025 continuing through MarchJune 31,30, 2026. These higher horsepower unit additions are reflective of our strategic plans to concentrate our business development on these higher margin applications. Furthermore, our equipment additions, during the 2026 period,periods, primarily compressor units and service vehicles, reflect higher overall costs due to broad inflationary pressures as compared to the 2025 period.periods. Amortization of the intangible assets acquired from Flatrock began on the Acquisition Date and the impact during the periods presented was not material.

During threesix months ended MarchJune 31,30, 2025, we recorded a nominal increase to the allowance for obsolescence primarily attributable to the transfer of inventory that remained useful from our former Midland, Texas facility, in connection with its closing in March 2025, to our other operating facilities. All of the remaining inventory from the Midland, Texas facility that was subject to the allowance for obsolescence was written off during the three months ended March 31, 2025. AsThere ofwas Marchno 31,impact 2026 and December 31, 2025, we had an inventory obsolescence balance of $3.6 million. Please see Note 4 (“Inventory”) toon our Condensedoperating Consolidatedincome Financial Statements for additional information regardingas the inventoryMidland allowance.allowance was eliminated.

We retired 134 and 68 units representing 17,700 and 12,073 horsepower, with remaining carrying values of $0.4 million and $0.7 million during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.

Gains recognized during the three and six months ended MarchJune 31,30, 2026 and 20242025 are primarily attributable to the sales of trucks after the completion of their useful lives.

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

Interest expense increased for the three and six months ended MarchJune 31,30, 2026, as compared to the corresponding periodperiods in 2025, due primarily to (i) higher interest costs resulting from higher average outstanding borrowings partially offset by the effect of $0.4lower millionaverage interest rates and (ii) the effect of lower capitalized interest, respectively,interest due primarily to the volume and timing of the completion of certain compressor assembly projects in the 2026 periodperiods as well as lower interest rates and (ii) higher interest costs of $0.4 million resulting from $56.5 million of higher average borrowings outstanding partially offset by the effect of lower average interest rates. In addition, amortization of debt issue costs increased during the three and six months ended MarchJune 31,30, 2026, as compared to the comparable periodperiods in 2025 due primarily to the amortization of costs associated with the FourthFifth Amendment tothat thewas Amendedcompleted in June 2026 and Restateda Creditprevious Agreement (the “Fourth Amendment”)amendment that was completed in April 2025. The lower average interest rates are consistent with the Federal Reserve interest rate reductions implemented in the second half of 2025 as well as the lower interest rates attributable to the Fourthprevious Amendment.amendment.

Other income (expense), net declined for the three and six months ended MarchJune 31,30, 2026 as compared to the corresponding periodperiods in 2025 due primarily to higher unrealized losses attributable to our COLI policies associated with our deferred compensation plan.

For interim periods, our income tax expense is computed based upon our estimated annual effective tax rate and any discrete items that impact the interim periods. Our estimated annual effective tax rate differs from the U.S. federal statutory rate of 21% primarily as a result of a higher effective tax rate attributable to state and local income taxes including the impact of projected apportionment of taxable income between states with different tax rates. In addition, the periods in 2026 were adversely impacted by a discrete item attributable to the Texas Comptroller’s amendments to Rule 3.588; a change in law enacted in June 2026 that conformed the Texas cost of goods sold depreciation to current federal law. This discrete item resulted in a 2.6% increase to our annualized effective rate. The Redomestication had no impact on the application of the amendments to Rule 3.588 regarding our income subject to taxation in Texas or any other state in which we operate.

Our primary sources of liquidity include cash provided by operating activities and borrowings under our Credit Facility which provides us with up to $400.0$500.0 million in borrowing commitments with an additional $100.0 million at our request through an accordion feature. The accordion feature is subject to certain conditions, including the absence of a default, the consent of new or existing lenders willing to provide additional commitments, and our pro forma compliance with the Credit Facility’s financial covenants. As of MarchJune 31,30, 2026, thewe borrowinghad base under the Credit Facility was $400.0 million with $226.0$328.0 million of borrowings outstanding leavingunder $174.0our Credit Facility with a weighted average interest rate of 6.48% as well as $0.2 million for outstanding letters of availabilitycredit. As of June 30, 2026, we had approximately $134.8 million available for borrowing under the Credit Facility.Facility, reflecting the applicable borrowing base calculation.

Our cash flows from operating and investing activities are subject to a degree of volatility due primarily to (i) the consistency of our customers in remitting amounts owed to us for our services in full and on a timely basis and (ii) the timing of payments to our vendors and suppliers for capital projects which are often made well in advance of placing new compressor equipment into service. In order to mitigate such volatilityvolatility, we employ disciplined efforts to monitor customer credit and maintain communications to support collection efforts when necessary. To the extent necessary, we rely on the availability of our Credit Facility to fund capital expenditures beyond that provided by our cash flows from operating activities.

Cash From Operating Activities. Our cash provided by operating activities was $23.0$48.5 million for the threesix months ended MarchJune 31,30, 2026. For additional information and an analysis of our historical cash flows from operating activities, see the “Cash Flows” discussion that follows.

Credit Facility Borrowings. During the threesix months ended MarchJune 31,30, 2026, we repaidborrowed $4.0$98.0 million, net of borrowings,repayments, under the Credit Facility. The following table summarizes our borrowing activity under the Credit facilityFacility for the periods presented:

Proceeds from Sales and Monetization of Assets. We continually evaluate the potential sale of assets, including underutilized or retired compressor units, obsolete and slow-moving inventory and non-strategic real estate assets, among others. For additional information and an analysis of orour historical proceeds from sales of assets, see the “Cash Flows” discussion that follows.

Capital Markets Transactions. From time-to-time and under market conditions that we believe are favorable to us, we may consider capital markets transactions, including the offering of debt and equity securities. We maintain an effective shelf registration statement with the Securities and Exchange Commission (the “SEC”) for up to $200 million for a variety of securities to provide financing optionality.

Cash Flows from Operating Activities. Our cash flows from operating activities increased by $1.8$16.2 million during the threesix months ended MarchJune 31,30, 2026, as compared to the comparable period in 2025. The net increase is primarily attributable to the receipt of $13.8 million in Januarythe first half of 2026 ofrelated $12.3 million ofto income tax refunds and relatedassociated interest as well as the favorable effects of higher realized margins attributable to growth in our high horsepower unit rentals. These increases were substantially offset by higher working capital uses including (i) the paydown of higher year-end accounts payable, (ii) growth in accounts receivable, (iii) increases in our maintenance parts inventory in support of our growing fleetfleet, (ii) implementation costs capitalized and paid for software services and (iviii) higher interest payments attributable to higher outstanding borrowings during the 2026 period as compared to the 2025 period.

Cash Flows from Investing Activities. In June 2026, we completed the Flatrock Acquisition for approximately $119 million of which $108.7 million was paid in cash, net of amounts acquired. For the threesix months ended MarchJune 31,30, 2026, and 2025, we invested approximately $15.2$34.0 million and $19.3$45.1 million, respectively, in rental equipment, property and other equipment. Included in these totals for 2026 and 2025 were $12.2$27.6 million and $16.7$38.8 million for growth capital expenditures to expand our rental fleet and $3.0$6.4 million and $2.6$6.3 million for capital maintenance projects, respectively. Our investment in rental equipment includes any changes to work-in-progress related to our rental fleet projects at the beginning of the year compared to the end of the period.

Cash Flows from Financing Activities. During the threesix months ended MarchJune 31,30, 2026, we had net repaymentsborrowings of $4.0$98.0 million and for the threesix months ended MarchJune 31,30, 2025 we had net repaymentsborrowings of $2.0$12.0 million under the Credit Facility. The net borrowings reflect advances obtained to fully fund the cash portion of the Flatrock Acquisition. The 2026 period includes a paymentpayments of $1.4$3.3 million for acommon stock dividends while there were no comparable amounts during the 2025 period as our common stock dividend.dividend began in the third quarter of 2025. The 2026 period also includes the payments of taxes attributable to the net share settlement of equity awardsawards. These outflows were partially offset by the receipt of over $1.0 million of proceeds from the exercise of stock options. There were no comparable cash flows for these items during the 2025 period.

Credit Facility. We havemaintain a senior secured revolving credit agreement, as amended, or the Credit Facility,Facility with Texas Capital Bank, National Association as administrative agent (the “Administrative Agent”), and 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”) with a total commitment of $400.0$500.0 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$600.0 million. 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. The maturity date of the Credit Facility is February 28, 2028.

As of MarchJune 31,30, 2026 we had $226.0$328.0 million outstanding under our Credit Facility with a weighted average interest rate of 6.79%.6.48%. As of MarchJune 31,30, 2026, we had approximately $174.0$134.8 million available for borrowing under the Credit Facility, subject to a borrowing base determination. As of MarchJune 31,30, 2026, we were in compliance with all financial covenants in our Credit Facility.

From time-to-time, we enter into off-balance sheet arrangements and transactions that can give rise to off-balance sheet obligations. As of MarchJune 31,30, 2026, the off-balance sheet arrangements and transactions that we have entered into include purchase agreements for certain compressor unit components that are fully anticipated consistent with our capital expenditure plans. We do not believe that these arrangements are reasonably likely to materially affect our liquidity or availability of capital resources.