Natural Gas Services Lifts 2026 Ebitda Outlook Midpoint

The Tip Desk · November 12, 2026 · 3 min read

Third-quarter rental revenue reached $58.9 million as the company booked its first full quarter of Flatrock and raised the 2026 Adjusted EBITDA midpoint.

Natural Gas Services Group (NGS), a provider of natural gas compression equipment, technology and services, reported third-quarter 2026 rental revenue of $58.9 million, a 41.9% year-over-year increase that accelerated from a 24.9% year-over-year rise to $49.4 million in the second quarter.

The company said the acceleration reflected the first full quarter of contribution from the Flatrock Compression Holdings acquisition, completed June 12, 2026, along with contracted fleet expansion and continued pricing strength. Total revenue increased 41.1% to $61.3 million from $43.4 million a year earlier.

Adjusted EBITDA rose 42.2% to $29.6 million from $20.8 million in the year-ago quarter, after a 27.4% year-over-year increase to $25.1 million in the second quarter. The company attributed the year-over-year gain primarily to higher rental revenue and rental adjusted gross margin, including the full-quarter Flatrock contribution. Sequentially, Adjusted EBITDA increased 18.2%.

Net income was $5.6 million, or $0.43 a share, compared with $5.8 million, or $0.46 a share, a year earlier. The company said the modest year-over-year decline was driven by $0.8 million of strategic transaction costs and integration expenses attributable to Flatrock, largely offset by higher rental revenue and associated gross margin. Sequential net income rose from $3.8 million, or $0.30 a share, in the second quarter. Adjusted net income was $6.2 million, or $0.48 a share.

Rental adjusted gross margin was 62.2% in the third quarter, after 61.1% in the second quarter and 61.5% a year earlier. Total adjusted gross margin was $36.9 million, or 60.2% of revenue. Operating income was $13.7 million.

Utilized horsepower stood at 683,952 (1,529 units) as of September 30, 2026, up 30.0% from 526,015 horsepower (1,235 units) a year earlier. Horsepower utilization was 87.8%, after a record 88.3% at June 30. Chief Executive Officer Justin Jacobs said horsepower utilization remained strong at 88% during the third quarter.

The company added more than 20,000 horsepower organically in the third quarter, bringing year-to-date additions to approximately 43,000 horsepower. It entered an agreement to sell its Tulsa fabrication facility for $4.75 million, expected to close by the end of November 2026.

NGS now expects 2026 Adjusted EBITDA of $105 million to $108 million, compared with prior guidance of $103 million to $108 million, raising the midpoint after already lifting the range from $92.5 million to $97.5 million in the second-quarter release. The company said the update reflects strong operating performance, continued Flatrock integration, high utilization and organic fleet expansion, balanced with expected inflationary pressures during the remainder of 2026. Growth capital expenditure guidance was narrowed to $60 million to $75 million; maintenance capital expenditure guidance remained $15 million to $19 million. The updated outlook excludes acquisition consideration.

The board declared a quarterly cash dividend of $0.16 a share, payable December 2, 2026, a 6.7% increase from the $0.15 third-quarter dividend. Year-to-date dividends totaled $5.2 million. No shares were repurchased in the third quarter under the $6.0 million program that expires in August 2027.

Cash flows provided by operating activities were $16.7 million in the third quarter. Investing outflows were $25.9 million, including $25.9 million of capital expenditures, of which $20.6 million was growth and $5.3 million maintenance. Outstanding revolving credit facility debt was $340.0 million with $139.8 million of availability and a 2.80x leverage ratio as of September 30, 2026. The company said it was in compliance with all terms of its credit agreement.