Natural Gas Services boosts profit on acquisition, fleet growth
The compression-services provider raised its 2026 adjusted EBITDA guidance to as much as $97.5 million after first-quarter earnings climbed 39%.
Natural Gas Services Group (NGS) reported first-quarter net income that rose 39% from a year earlier, driven by a recent acquisition and accelerating fleet expansion. The compression-services provider said earnings reached $6.8 million, or $0.53 a share, as revenue growth outpaced costs and utilization improved.
The quarter marked a strategic inflection for the company, which closed its $120 million purchase of Flatrock Compression Holdings in April. The deal added 86,000 horsepower—95% utilized—primarily large electric-motor units in the Permian Basin and Eagle Ford, immediately lifting key metrics and expanding its operational footprint.
Revenue climbed 21% year-over-year to $47.1 million, accelerating from 16% growth in the prior quarter and 11% in the third quarter of 2025. Adjusted EBITDA rose 26% to $24.3 million, also quickening from 18% growth in the fourth quarter. The company said the results reflected higher rental revenue per horsepower and improved asset utilization, which reached 86.9%, up from 84.9% in the prior quarter.
Rented horsepower grew 17% year-over-year to 574,969, with the company adding 17,000 horsepower in the quarter, mostly large units tied to longer-duration contracts. Adjusted gross margin for the rental segment expanded to 63.7% from 58.5% in the prior quarter, contributing to a total adjusted gross margin of $30.2 million.
Natural Gas Services raised its 2026 adjusted EBITDA guidance to a range of $92.5 million to $97.5 million, up from $90.5 million to $95.5 million previously. The company also increased its quarterly dividend by 36% to $0.15 a share, citing confidence in cash generation. Leverage improved to 2.33 times from 2.72 times in the prior quarter, supported by a $500 million credit facility expansion.
The company disclosed that Devon Energy accounted for more than 10% of revenue in the third quarter of 2025, a new customer concentration detail. Separately, it classified its Midland fabrication facility as held for sale, signaling a shift toward monetizing non-core assets.